Genesalio & Genesalio (No 5)
[2024] FedCFamC1F 450
•2 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Genesalio & Genesalio (No 5) [2024] FedCFamC1F 450
File number(s): MLC 7657 of 2018 Judgment of: JOHNS J Date of judgment: 2 July 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – property – where the wife seeks to file an amended Statement of Claim – where the respondents oppose the amendments – where the wife submits the amendments do not substantially alter the claim or materially change her case – where the wife submits the amendments arise out of the late disclosure by the respondents – where the husband submits there is no adequate reason for the amendments – where the second respondent challenges the substance of the wife’s pleadings – amendment permitted
FAMILY LAW – PRACTICE AND PROCEDURE – joinder – where the wife seeks to join entities in which the second respondent is the sole director and shareholder – where both respondents oppose the joinder –– where the entities are necessary parties – order for joinder
FAMILY LAW – PRACTICE AND PROCEDURE –summary dismissal – where the second respondent seeks the wife’s application be summarily dismissed – where the wife has a triable cause of action – where factual disputes exist between the parties as to their property interests – where it cannot be said the wife has no reasonable prospect of success
Legislation: Family Law Act 1975 (Cth) ss 79, 79(10)(b), 102QAB(1), (2) & (3), 106B
Family Law Amendment Act2023, Schedule 5
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 56, 62, 67, 69
Federal Circuit and Family Court of Australia Rules 2021 (Cth) rr 6.23, 3.01, 3.03
High Court Rules 2004, r 27.04
Partnership Act 1958 (Vic)
Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175;
Curtain & Curtain [2022] FedCFamC1A 134;
Genesalio & Genesalio [2023] FedCFamC1F 160;
Jordan & Sutton (No 2) [2022] FedCFamC1F 850;
Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251;
Lund & Whittall [2024] FedCFamC1F 271;
Mir v Mir [2023] NSWSC 408;
Mummery v Irvings Pty Ltd (1956) 96 CLR 99;
Palermo v Palermo [2015] WASCA 49;
Quincey & Quincey [2023] FedCFamC2F 791;
Ritter & Ritter and Anor (2020) FLC 93-957;
Trustee of the Bankrupt Estate of Nagarno & Talbert [2024] FedCFamC1F 19;
Wayne & Dillon & Anor [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 97 Date of hearing: 17 May 2024 Place: Melbourne Counsel for the Applicant: Dr Dinelli KC & Ms Frederico Solicitor for the Applicant: Mazzeo Lawyers Counsel for the First Respondent: Ms Sparke KC Solicitor for the First Respondent: Matthew Oldham Barrister & Solicitor Counsel for the Second Respondent: Mr Fray SC & Mr Fuller Solicitor for the Second Respondent: Franzese & Associates 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
Second Respondent
ORDER MADE BY:
JOHNS J
DATE OF ORDER:
2 JULY 2024
THE COURT ORDERS THAT:
1.That the wife have leave to file and serve the Amended Statement of Claim substantially in the form of Schedule A to the Application in a Proceeding filed 18 April 2024 by 4.00pm on 2 July 2024.
2.That N Pty Ltd be joined to the proceedings as the Third Respondent.
3.That E Pty Ltd be joined to the proceedings as the Fourth Respondent.
4.That AA Pty Ltd be joined to the proceedings as the Fifth Respondent.
5.That the Response to Application in a Proceeding filed by the First Respondent on 10 May 2024 be otherwise dismissed.
6.That the Response to Application in a Proceeding filed by the Second Respondent on 14 May 2024 be otherwise dismissed.
7.That paragraphs 1 to 10 and 14 to 26 inclusive of the wife's Application in a Proceeding filed 18 April 2024 be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
The applicant wife, Ms Genesalio, and the first respondent husband, Mr Genesalio, were married for a period of approximately 26 years. The parties separated under the one roof in 2017 and physical separation occurred in November 2018. The parties divorced in 2020. Both parties now seek an adjustment of their property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The wife’s original Application for Final Orders was filed in July 2018. By Application in a Proceeding filed in April 2022, the wife sought to join the husband’s brother, Mr M Genesalio as second respondent in the proceedings. That application was opposed by the husband and his brother.
On 26 April 2023, orders were made joining Mr M Genesalio as the second-named respondent in the proceedings. In addition, orders were made that day for valuation of the parties’ property.
Further orders were made on 11 July 2023 fixing the matter for final hearing to commence in February 2024 and for the second respondent to provide specific disclosure. Those orders provided that the second respondent was to produce identified documents within 60 days, that is, by 11 September 2023.
It is common ground that the orders for the second respondent to make disclosure were not complied with. As a result, further orders were made by consent on 14 December 2023 extending the time for compliance with the previously made orders for disclosure. The time for the second respondent’s compliance with those orders was extended to 22 February 2024. In addition, the final hearing listed to commence before me on 19 February 2024 was vacated and relisted to commence before me on 29 July 2024.
Notwithstanding the indulgence extended to the second respondent, he did not produce documents in compliance with those orders until 15 March 2024. Those documents were produced under cover of objection set out in the letter from his lawyer, including that the second respondent maintains that “there is no jurisdiction over him, and the claim is an abuse of process and should be struck out”.[1]
[1] Affidavit of Mr CC filed 17 April 2024, Annexure MCC-1, p. 9.
The disclosure made by the second respondent in that correspondence was the first occasion upon which he has produced documents in the proceedings. As a result of the production of those documents, the applicant wife seeks leave to amend her Statement of Claim in the proceedings.
That application is made by Application in a Proceeding filed 18 April 2024. The wife annexes to that application her proposed Amended Statement of Claim in which she seeks:
(1)As to the husband and the second and fourth to sixth respondents, a declaration that the properties and other assets set out in paragraphs 6A to 12 of the Amended Statement of Claim are held pursuant to the terms of the “[Genesalio Partnership Agreement]” (the terms of which she contends include that the husband and the second respondent would contribute their respective skills for the acquisition, conservation, maintenance and improvement of the businesses and investments, and each would benefit from the conduct of and share in the wealth generated by such businesses and investments in equal parts);[2]
(2)As to the proposed fourth and fifth respondent’s, orders that the instruments entitled “Declaration of Excluded Beneficiaries” dated 18 September 2018 be set aside.[3]
[2] Application in a Proceeding filed 18 April 2024, p. 30 and p. 18.
[3] Application in a Proceeding filed 18 April 2024, p. 30.
In addition to that relief, the wife seeks to join as parties to the proceedings the following entities:-
·“[N Pty Ltd]” in its own right and as trustee for the [N Trust] as the fourth respondent;
·“[E Pty Ltd]” in its own right and as trustee for the [E Trust Fund] as the fifth respondent; and
·“[AA Pty Ltd]” in its own right and as trustee for the [AA Trust] as the sixth respondent.
The second respondent is the sole director and shareholder of each of those entities.
Although the wife’s application also sought the joinder of “[Z Pty Ltd]”, that matter was not pressed, as the entity was de-registered. Senior Counsel for the second respondent submitted that the process of re-registration of that company was in train.
The wife also seeks orders that she be permitted to seek further discovery from the first and second respondents, and further, that the second respondent file and serve an affidavit pursuant to Rule 6.23 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) responding to the specific questions served upon him on 11 April 2024.
The husband seeks that the wife’s Application in a Proceeding filed 18 April 2024 be dismissed.
The second respondent also seeks orders that the Application in a Proceeding be dismissed, and further, that the wife’s Application for Final Orders and Statement of Claim, insofar as it relates to the second respondent, be summarily dismissed; he also seeks consequential orders that he be removed as a party to the proceeding.
At the commencement of the interlocutory hearing on 28 June 2024 I made orders as sought by the wife with respect to amending her claim and joinder and I dismissed the second respondent’s application that the wife’s claim be summarily dismissed. These are my reasons for judgment with respect to those orders.
THE PARTIES
The wife is aged 64 years and is employed as an educator.
The husband is aged 68 years. The husband is a tradesperson and was employed as a manager for “[S Pty Ltd]”, a business conducted by an entity controlled by the second respondent. The husband alleges that he has suffered 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. Physical separation occurred in November 2018 upon the making of orders for the wife to have sole use and occupation of the former matrimonial home in Suburb C. Since that time, the husband has resided with the second respondent at the home of their late parents at F Street, Suburb C.
The husband and wife divorced in 2020. There are three adult children of their relationship.
The background to the dispute as between the wife, the husband and the second respondent is otherwise set out in the earlier judgment of Genesalio & Genesalio [2023] FedCFamC1F 160. I do not propose to repeat that history here.
MATERIAL RELIED UPON
The applicant relies on the following material:-
·Outline of Case document filed 15 May 2024;
·Application in a Proceeding, in particular Schedule A of that application which contains the Proposed Amended Statement of Claim, filed 18 April 2024;
·Affidavit of Mr CC filed 17 April 2024; and
·Affidavit of Mr CC filed 16 May 2024.
The first respondent relies on the following material:-
·Outline of Case document filed 15 May 2024;
·Response to Application in a Proceeding filed 10 May 2024; and
·Affidavit of the first respondent filed 12 May 2024.
The second respondent relies on the following material:-
·Outline of Case document filed 15 May 2024;
·Response to Application in a Proceeding filed 14 May 2024; and
·Affidavit of the second respondent filed 14 May 2024.
ORDERS SOUGHT
The wife seeks orders in the terms of her Outline of Case document filed 15 May 2024:-
1.The Wife have leave to file and serve the Amended Statement of Claim substantially in the form of Schedule A to the Application dated 18 April 2024, within 48 hours of the date of these orders.
2.That [N Pty Ltd] be joined to these proceedings as the third-named Respondent.
3.That [E Pty Ltd] be joined to these proceedings as the fourth-named Respondent.
4.That [AA Pty Ltd] be joined to these proceedings as the fifth-named Respondent.
5.That [Z Pty Ltd] be joined to these proceedings as the sixth-named Respondent.
6.In the alternative to paragraph 5 above, the Commonwealth of Australia as trustee for the [Genesalio Family Trust] be joined to these proceedings as the sixth-named respondent.
(Emphasis in Original)
The husband seeks orders in the terms of his Response to Application in a Proceeding filed 10 May 2024. That document seeks an order in the following terms:-
1.That the hearing of the balance of the Application in a Proceeding filed and served on 18 April 2024 be dismissed.
The second respondent seeks orders in the terms of the Response to Application in a Proceeding filed on 14 May 2024. The orders sought by him are as follows:-
1. The Applicant's Application in a Proceeding filed on 18 April 2024 be dismissed.
2.Pursuant to r 10.09, the following matters be summarily dismissed as against the Second Respondent:
a.Paragraphs 2, 3 5, 6, 7, 8, 10, 11 of the Applicant's Further Amended Initiating Application filed on 11 May 2022 (insofar as they refer to relief against the Second Respondent).
b.The Applicant's statement of claim filed on 19 August 2022 (insofar as they refer to relief against the Second Respondent)
3.Consequential to the preceding paragraph, the Second Respondent be removed as a party to the proceeding.
4.The Applicant pay the Second Respondent's costs of and incidental to his participation in this proceeding.
THE HEARING
The hearing was conducted on the papers. All parties were represented by Senior Counsel. Each party relied upon the material identified above and the oral submissions made by Senior Counsel on their behalf. 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.
SHOULD THE WIFE BE GRANTED LEAVE TO AMEND HER STATEMENT OF CLAIM?
Legal principles
The power of this court to give directions about practice and procedure in a civil proceeding is to be found at s 69 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) ("the FCFCOA Act") which provides:-
Power of the Federal Circuit and Family Court of Australia (Division 1) to give directions about practice and procedure in a civil proceeding
(1)The Federal Circuit and Family Court of Australia (Division 1) or a Judge may give directions about the practice and procedure to be followed in relation to a civil proceeding, or any part of a civil proceeding, before the Court.
…
(4)In particular, the Federal Circuit and Family Court of Australia (Division 1) or Judge may do any of the following:
(a) dismiss the proceeding in whole or in part;
(b) strike out, amend or limit any part of a party’s claim or defence;
(c) disallow or reject any evidence;
(d) award costs against a party;
(e)order that costs awarded against a party are to be assessed on an indemnity basis or otherwise.
Section 56 of the FCFCOA Act states:-
Practice and procedure
(1) Subject to this Chapter and the Family Law Act 1975, the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1) is to be in accordance with:
(a) regulations made under this Act and the Family Law Act 1975; and
(b) the Rules of Court.
(2)To the extent that the provisions mentioned in subsection (1) are insufficient, the Rules of the High Court apply, mutatis mutandis, so far as they are capable of applying and subject to any directions of the Federal Circuit and Family Court of Australia (Division 1) or a Judge, to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
(3)This section does not apply in relation to proceedings that are transferred to the Federal Circuit and Family Court of Australia (Division 1) from the Federal Court.
(4)In this section, practice and procedure includes all matters with respect to which regulations under this Act, the Family Law Act 1975 or Rules of Court may be made.
As the Rules are silent in relation to amendment of pleadings, the High Court Rules are incorporated by operation of s 56(2) of the FCFCOA Act.
Rule 27.04 of the High Court Rules 2004 (Cth) (the “High Court Rules”) refers to the “Contents of Statements of Claim” and is the provision to be applied in determining whether pleadings are deficient in this jurisdiction. Rule 27.04 relevantly provides:-
A Statement of Claim:
(a)shall state the basis on which it is claimed that the matter is within the original jurisdiction of the Court;
(b)shall contain in a summary form a statement of all the material facts on which the plaintiff relies, but not the evidence by which those facts are to be proved;
(c)where any claim arises by or under any Act, shall identify the specific provisions relied on; and
(d)shall contain the necessary particulars of any fact or matter pleaded, including:
(i)all particulars necessary to enable the opposite party to plead or to define the questions for trial or to avoid surprise at trial; and
(ii)particulars of any misrepresentation, fraud, breach of trust, wilful default, or like matter; and
(e) shall state specifically the relief or remedy claimed.
Notwithstanding those provisions, it is important to note that this Court is not a Court of pleadings. That this is so is confirmed at s 62 of the FCFCOA Act which provides:-
Proceedings may be instituted by application
(1)Proceedings may be instituted in the Federal Circuit and Family Court of Australia (Division 1) by way of application without the need for pleadings.
(2) Subsection (1) has effect subject to the Rules of Court.
Even where pleadings have been ordered, as in this case, proceedings in this Court are determined on the applications and responses filed together with the evidence filed in support, not on the basis of pleadings. As was observed by Tree J in Quincey & Quincey [2023] FedCFamC2F 791, the purpose of pleadings is to enable parties and the Court to discern the precise nature and extent of dispute between the parties; cases are determined on the evidence, not the pleadings.
That approach was confirmed most recently by Berman J in Lund & Whittall [2024] FedCFamC1F 271, a matter where an application for joinder was in issue. There, his Honour stated at [33]:-
This Court does not rely upon or require pleadings. It is permissible to gain an understanding of the nature and extent of the claim and the particulars of the claim from documents properly identified. In this regard, the substantial affidavit material and written submission documents seeks to set out the parameters of the applicant’s claim. It is not for me to determine to finality the orders sought by the applicant against the second respondent unless I am satisfied that they are so lacking in any merit that they would not be able to resist an application for summary dismissal.
Hence, whilst pleadings are an aide to the Court in defining issues as between the parties so that each knows the case they are required to meet, and so as to ensure that a case is conducted in an orderly manner by reference to the identified issues, the pleadings are not determinative of the proceedings. Rather, it is the orders sought in the applications, responses and replies filed, together with the evidence adduced in support thereof which establishes the parameters of the dispute.
The wife’s contentions
The amendments sought by the wife are clearly identified by her in the Amended Statement of Claim annexed to her Application in a Proceeding filed 18 April 2024 (“the Amended Claim”).[4] Hence, the husband and the second respondent have been on notice as to the proposed amendments since that time.
[4] Application in a Proceeding filed 18 April 2024, p. 11 – 31.
The proposed amendments may be summarised as follows:-
·As to the claim with respect to the Genesalio Partnership Agreement at paragraph 5, the timeframe is expanded so that it is claimed that since around 1982 (as opposed to mid‑1985), the husband and the second respondent agreed to conduct businesses and make investments by way of a partnership. The particulars in support of that claim have been amended and expanded, particularly with respect to the matters relating to the Genesalio Family Trust, the AA Trust, the Genesalio Family Unit Trust, the E Trust Fund and the GG Trust. Hence, the claim is not new; the period in which it is alleged the partnership has operated has been extended by a period of approximately three years;
·At paragraph 6A of the Amended Claim, it is contended that from 2003 the husband and the second respondent operated a business and later a second business pursuant to the Genesalio Partnership Agreement and that the husband had an equal share in that business with the second respondent. Again, these are not fresh allegations as they are matters raised by the wife in her earlier filed trial affidavit material and are contentions well known to the parties.[5]
·Paragraph 9 of the Amended Claim includes additional material facts in relation to the contention that the husband purchased 2 G Street and that it has been used to benefit the husband, the second respondent and entities associated with them. These too are matters raised by the wife in her earlier filed material;[6]
·Paragraph 12 of the Amended Claim expands the list of motor vehicles and related items purchased against which claim is made to include two additional motor vehicles (expanding the list from 19 to 21) and five additional related items. The particulars have been amended to include reference to an earlier filed affidavit of Ms FF sworn 24 March 2022.Hence, the husband and his brother have been on notice in relation to those matters since at least late March 2022;
·At paragraphs 22 and 23 of the Amended Claim, it is contended that specified instruments have been executed by the second respondent in his capacity as director of trustee companies which purport to exclude the husband, the wife and their children as a class of general beneficiaries of the E Trust Fund and N Pty Ltd. This is an issue that has emerged as a result of the second respondent’s disclosure of documents described as “Declaration of Excluded Beneficiaries”, both of which were executed on 20 September 2018, after the separation of the husband and the wife; and
·At paragraph 24 of the Amended Claim, it is contended that the documents referred to at paragraphs 22 and 23 were shams and further or alternatively were made at the direction of, or for the benefit of, the second respondent and the husband and were made to defeat an anticipated order in these proceedings. At paragraph 25 of the Amended Claim, the wife seeks that those instruments be set aside pursuant to s 106B of the Family Law Act 1975 (Cth).
[5] Wife’s trial affidavit filed 3 June 2024, [33], [128] – [129], [131] & [134].
[6] Wife’s trial affidavit filed 3 June 2024, [16], [35], [36], & [70(a)].
The wife submits that the amendments to the Statement of Claim do not substantially alter the claim, it being the central contention of the claim from the outset that there existed a partnership, described by the wife’s Senior Counsel as an overarching agreement, between the husband and the second respondent (“the [Genesalio Partnership Agreement]”) to invest in and generate wealth for their mutual benefit. That claim was initially raised by the wife in her first filed Statement of Claim dated 19 August 2022.
It was submitted on behalf of the wife that in circumstances where the Court has already found that the wife has established a triable cause of action in relation to that claim, there is no basis for a refusal of her application to amend the claim.
It was further submitted that many of the proposed amendments arise as a result of the late disclosure provided by the husband and the second respondent. As a consequence of the late-received documents, it was submitted that any inconvenience suffered by the husband or the second respondent as a result of the proposed amendments is an inconvenience solely of their own making in circumstances where they have not complied with orders for disclosure.
It was submitted on behalf of the wife that her proposed amendments do not represent a substantive or material change to the pleading. It was submitted that it was always the wife’s intention to provide further particulars to her claim upon receipt of disclosure from the husband and the second respondent.
Further, it was submitted that particulars do not modify or alter the cause of action sued upon (per Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 110) and therefore any amendment to the particulars is not capable of challenge.
As to the amendments sought in relation to the operation of the business and the second business as contained at paragraph 6A of the Amended Claim, the wife submits that it has always been her case that the husband and second respondent operated these businesses and it is specifically referred to in her affidavit filed 22 February 2022 at [27] to [28]. Accordingly, it is submitted that this amendment does not represent a material change in the wife’s case. Similarly, the proposed amendments to pleadings in relation to the E Pty Ltd and E Trust Fund at paragraph 7 and the Genesalio Family Unit Trust and the Genesalio Family Trust at paragraph 9 are not new matters and do not substantially alter the wife’s case.
The husband’s contentions
The husband is critical of the wife for not presenting any reason or any adequate explanation for the amendments she seeks to make. He submits that the wife has not provided an affidavit which provides any reason, ground or excuse for the amendments proposed by her.
I do not accept that submission in circumstances where the wife’s solicitor, Mr CC, in his affidavit filed 17 April 2024 plainly details at [4] that various documents were produced by the second respondent’s lawyer on 15 March 2024. Further, Mr CC deposes that that was the first occasion on which the second respondent had provided any disclosure documents for the entities and trusts. He further deposes at [9] that the second respondent and the husband were given notice of the proposed amendments to the Statement of Claim by letter dated 16 April 2024.
In circumstances where the second respondent was originally required to make disclosure in September 2023 pursuant to orders made in July 2023, in my view, the complaints now raised by the husband and the second respondent as to the late amendment of the wife’s claim are disingenuous.
It was submitted on behalf of the husband that the proposed Amended Claim was a “bad pleading” and further that its effect was to abandon the previous Statement of Claim. I do not consider the proposed amendments to be an abandonment of the previous Statement of Claim as contended for by the husband. As noted earlier, the proposed amendments provide further particulars and material facts in support of existing claims. The only new matter raised is that contained at [22] – [25] inclusive in relation to the wife’s s 106B claims, arising from documents first produced by the second respondent in March 2024. I am not persuaded that the issues raised by the Amended Claim raise any facts or matters unknown to the husband and the second respondent.
In addition to those matters, the husband contends that the proposed amendments are substantial; that they seek relief against companies which are trustees of trusts, which each have their own classes of beneficiaries to protect. Accordingly, the effect of the proposed amendment, it is said, will widen the case beyond simplistic or clarifying amendments, as it seeks orders against three entities which were not previously parties.
The husband also contends that the proposed amendments are confusing and that it is unclear as to whether the assets of the entities joined are claimed to be assets of the alleged partnership between the husband and the second respondent. I do not accept that submission in circumstances where paragraphs 5 and 6 of the Amended Claim set out clearly the wife’s contentions in relation to what is there described as the Genesalio Partnership Agreement.
The second respondent’s contentions
The second respondent also opposed the Amended Claim. In support of that position, he relied upon the principles enunciated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (“Aon”). At [114] the High Court said:-
114…delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants… It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases.
The decision of the High Court in Aon provides authority for courts to have regard to case management principles when exercising discretion in procedural applications such as this, even to the prejudice of a party to a particular proceeding. Specific reference was made in Aon as to the role courts must play in ensuring the disposal of litigation; that it is not sufficient to pursue just and procedural outcomes merely by reference to the interests of the parties to the proceeding; rather, courts must consider the wider public interest and the efficient use of limited court resources.
Further, the second respondent relied upon the overarching purpose of civil practice and procedure as set out at s 67 of the FCFCOA Act which provides:-
(1)The overarching purpose of the civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 1), is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Note 1: For civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 1), see subsection (4).
Note 2: The Federal Circuit and Family Court of Australia (Division 1) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(2)Without limiting subsection (1), the overarching purpose includes the following objectives:
(a)the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 1);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court’s overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3) The civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 1), must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(4) The civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 1), are the following, so far as they apply in relation to civil proceedings:
(a) the Rules of Court;
(b) any other provision made by or under this Act, or any other Act, with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
It was submitted that the wife has not attempted to address the matters raised in Aon, noting that the trial is listed for July 2024. However, those submissions are silent as to the impact of the second respondent’s own non-compliance with orders of the Court for disclosure and the effect of his delay in production of documents upon the orderly conduct of the proceedings.
The second respondent also challenged the substance of the wife’s claim, contending that it is unclear in the Amended Claim as to what the wife contends is the property of the parties to the marriage. He also challenges her contentions as to the existence of a partnership as between the husband and the second respondent and was critical of the Amended Claim insofar as it does not address the elements of a partnership within the meaning of the Partnership Act 1958 (Vic).
I do not accept those submissions. The wife’s position from the filing of her original Statement of Claim has been that the Genesalio Partnership Agreement as contended in [5] and [6] of the Amended Claim is an “overarching agreement” as contemplated by the West Australian Court of Appeal in Palermo v Palermo [2015] WASCA 49 (“Palermo”).
The second respondent also relied upon the decision of Mir v Mir [2023] NSWSC 408 (“Mir”), particularly at [83] to [86] in support of submissions that the Amended Claim was “fundamentally flawed” as the claim that the alleged overarching agreement captures the underlying assets held by the entities, as contended by the wife, is not sustainable, having regard to the decision of the Court of Appeal in Palermo. It was submitted that having regard to the decision in Mir any claim as to sharing of wealth arising from an overarching partnership cannot ignore the underlying company and trust structures and could only be made in relation to after-tax profit, as was contemplated in Palermo.
I do not accept that submission having regard to the later statements of Ball J in Mir at [152], where in assessing the conduct of the three brothers who established the ‘Mir Group’ he observed:-
…on the evidence before the Court, there is much to be said for the proposition that [the brothers], by their conduct and by instructions given to advisors, impliedly agreed that they would exercise their powers as trustees, directors or partners of Mir Group entities or would procure that members of their families who acted as trustees, directors or partners of Mir Group entities would exercise their powers to ensure that the profits of the group would be distributed equally between the three families. If there was such an agreement, questions arise concerning its status following George’s death and whether it had other terms and other parties…However, no party advanced an argument in support of such an agreement.
Although that position was not argued at trial in Mir, it is evident having regard to those comments that Ball J considered that it was an arguable proposition.
Having regard to the decisions of both Palermo and Mir, I am satisfied that the position contended for by the wife, that is, that there is an overarching agreement between the husband and the second respondent, described in the original Statement of Claim and the proposed Amended Claim as the Genesalio Partnership Agreement, which provides for a sharing by them “in equal parts” of the wealth generated by the businesses and investments acquired by them and/or companies controlled by them, is arguable. The observations made by me in the judgment handed down on 26 April 2023 (Genesalio & Genesalio [2023] FedCFamC1F 160) continue to apply. There I stated as follows:-
[113]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. As discussed in my determination of the original joinder application, the resolution of that dispute will only be achieved upon a testing of the evidence at final hearing.
Conclusion
The central issue in the case is whether there is an overarching partnership or agreement as between the husband and the second respondent, the effect of which is to give rise to the husband having interest in property otherwise held by the second respondent, or entities controlled by him. As is set out in the Amended Claim and also confirmed by Senior Counsel for the wife, she seeks declaratory relief in relation to the property and assets of the Genesalio Partnership Agreement in accordance with the terms of that “overarching agreement”. As earlier noted, that dispute can only be resolved upon the testing of evidence at trial.
Senior Counsel for the wife submitted that the principles enunciated in Aon should not be used as a weapon to shut out amendment of pleadings in circumstances where the late amendment of pleadings is due to the second respondent’s failure to comply with orders of this Court for disclosure. I agree with and accept that submission.
I also accept the submission made on behalf of the wife that there is no substantial alteration to the claims made by her as against the husband and the second respondent. The proposed amendments expand particulars and material facts relied upon by her but otherwise do not significantly alter the nature of her claims. Accordingly, I will make orders permitting the amendment of her Statement of Claim as sought.
SHOULD THE PROPOSED FOURTH TO SIXTH RESPONDENTS BE JOINED?
Section 79(10)(b) of the Family Law Act 1975 (Cth) (“the Act”) 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 parties 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:-
(1)Is the person sought to be joined a person whose rights may be directly affected by an issue in the proceeding; and
(2)Is the participation of that person as a party necessary for the Court to determine all issues in dispute in the proceeding?
The issue of joinder was considered by Harper J in Jordan & Sutton(No 2) [2022] FedCFamC1F 850. There, Harper J observed:-
39.It does not matter whether a proposed party wishes to participate in a proceeding: Arida v Arida [2015] NSWCA 170, per Sackville AJA at [19] (with Bell P and Macfarlan JA agreeing).
40.It is well settled that, applying these principles, it can be appropriate to join third parties to a marriage to proceedings in this Court, for example, to bind them in respect of declarations as to property interests pursuant to s 78 or as ancillary to the exercise of discretion in s 79 or s 106B to set aside dispositions: Valceski v Valceski [2007] NSWSC 440; (2007) 70 NSWLR 36 at [31]–[33]; Khalif & Khalif (No 2) [2021] FedCFamC1F 308 at [37]. Clearly, according to these principles, the existence of claims for orders affecting the rights or interests of third parties proposed to be joined usually compels the conclusion that those parties are “necessary”. Such joinder is, nonetheless, an exercise of the Court’s discretion.
Later, his Honour noted at [59]:-
…The question for the Court under r 3.01 will always be whether, in all the circumstances, joinder of third parties is “necessary”. Ultimately this is no different to the essential question posed to the Court by application of ordinary general law principles concerning joinder. Once the Court is satisfied that joiner is necessary, it will be ordered either under the mandatory terms of r 3.01 or in the exercise of discretion under the general law.
It was submitted on behalf of the wife that the disclosure of documents, including but not limited to trust deeds, instruments purporting to be declarations of excluded beneficiaries and the like, necessitated the provision of further particulars of claim and an expansion of material facts relied upon in relation to those claims. It is also submitted that the provision of those documents and information has expanded the class of respondents to the claim to include N Pty Ltd, E Pty Ltd and AA Pty Ltd.
The wife’s claims insofar as they relate to the E Pty Ltd as trustee for the E Trust Fund (the proposed fifth respondent) arises as a result of the husband’s role as a director and shareholder in the entity until 2009, his subsequent role in the acquisition, conservation and improvement of assets owned by the entity, his payment of rates in relation to property held by the entity and until September 2018, the existence of beneficial entitlements in the E Trust Fund, together with the wife and their children which were allegedly extinguished upon the purported exclusion of those persons pursuant to a Declaration executed at that time.
The wife seeks orders pursuant to s 106B to set aside the “Declaration of Excluded Beneficiaries” in relation to the E Trust Fund and otherwise a declaration that the properties and other assets of that entity are held pursuant to the terms of the Genesalio Partnership Agreement.
The husband and the second respondent reject the wife’s contentions.
It is evident that there is a significant dispute as between the parties in relation to the wife’s claims and that dispute is only capable of resolution upon a testing of evidence. Having regard to the nature of the claims made by the wife as against that entity, I am satisfied it is a necessary party in the resolution of that dispute.
Accordingly, I will make orders for the joinder of the E Pty Ltd in its own right, and as trustee for the E Trust Fund.
As to the proposed fourth-named respondent, N Pty Ltd in its own right, and as trustee of the N Trust, the wife contends that the husband, the second respondent and companies associated with them obtained loans to facilitate that entity’s purchase of the property at L Street (“the L Street property”). Further, the wife contends that that property has been used for the benefit of the husband, the second respondent and companies associated with them and that both the husband and the second respondent contributed towards the acquisition, conservation, maintenance and improvement of the L Street property held by that entity. The wife seeks a declaration that that entity holds properties and other assets pursuant to the Genesalio Partnership Agreement.
Further, the wife seeks an order pursuant to s 106B that the purported Declaration of Excluded Beneficiaries executed by the second respondent in September 2018 (after the parties’ separation) be set aside. That document purports to exclude the husband, the wife and their children from the class of general beneficiaries of the N Trust.
Again, having regard to the matters pleaded and the claims made in relation to that entity I am satisfied that it is a necessary party in the proceedings and will order that the N Pty Ltd in its own right and as trustee of the N Trust be joined as a party to the proceedings.
As to the proposed joinder of AA Pty Ltd in its own right and as trustee for the AA Trust, as the sixth respondent, the wife relies upon paragraphs 5(h) of the Amended Claim wherein she contends that the husband was a director and shareholder of the entity, that he was a beneficiary of the associated Trust and that he was employed by the entity on a below-market wage, notwithstanding his representations to credit agencies as to the income derived by him from that source.
The wife contends that by virtue of the husband’s role in that entity, he has an entitlement to share in the profits of the entity and further, that pursuant to the terms of the Genesalio Partnership Agreement, he has entitlement to the assets held by that entity. It is contended by the wife that that entity has purchased and owned various motor vehicles as set out at paragraph 12 of the Amended Claim.
The husband and the second respondent reject those contentions.
Again, I am satisfied that the dispute as between the parties in relation to these matters is only capable of resolution following a testing of evidence. Further, I am satisfied that in order to resolve the dispute, it is necessary that that entity be joined as a party to the proceedings. Accordingly, I will make orders to that effect.
SHOULD THE WIFE’S CLAIM AGAINST THE SECOND RESPONDENT BE SUMMARILY DISMISSED?
Section 102QAB of the Family Law Act 1975 (Cth) (“the Act”) sets out the circumstances in which the Court may make a summary decree. It provides as follows:-
No reasonable prospect of successfully defending proceedings
(1)The court may make a decree for one party (the first party) against another in relation to the whole or any part of proceedings if:
(a)the first party is prosecuting the proceedings or that part of the proceedings; and
(b)the court is satisfied that the other party has no reasonable prospect of successfully defending the proceedings or that part of the proceedings.
No reasonable prospect of successfully prosecuting proceedings
(2) The court may make a decree for one party (the first party) against another in relation to the whole or any part of a proceedings if:
(a)the first party is defending the proceedings or that part of the proceedings; and
(b)the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
When there is no reasonable prospect of success
(3) For the purposes of this section, a defence or proceedings or part of proceedings need not be:
(a) hopeless; or
(b) bound to fail;
to have no reasonable prospect of success.
Section 102QAB of the Act was inserted pursuant to Schedule 5 of the Family Law Amendment Act 2023 which repealed s 45A and replaced it with s 102QAB. The test for the making of a summary decree is in identical terms to that previously provided and requires that the Court needs to be satisfied that a party “has no reasonable prospect of successfully” defending the proceedings (in the case of s 102QAB(1)) or prosecuting the proceedings (in the case of s 102QAB(2)).
In determining whether a proceeding has “no reasonable prospect”, it is not necessary to make a finding that a proceeding is “hopeless” or “bound to fail”.
In Lindon v Commonwealthof Australia(No 2) (1996) 136 ALR 251 at 255-256, (“Lindon”) Kirby J considered the approach to be taken in the determination of applications for summary relief, stating:-
1.It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the court, is rarely and sparingly provided.
2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.
3. An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
4. Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
5. If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading. A question has arisen as to whether O 26, r 18 applies to part only of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim.
6. The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
(Footnotes Omitted)
In Ritter & Ritterand Anor (2020) FLC 93-957 at [27], the Full Court adopted the statement of principle by Kirby J in Lindon at [3].
Those principles continue to have application in the determination under s 102QAB of the Act. In applying those principles, the Full Court observed in Curtain & Curtain [2022] FedCFamC1A 134 at [21] that in determining an application for summary dismissal “[t]he Court does not undertake a preliminary trial, nor is a detailed hearing of the case on its merits required.” Berman J in the decision of Trustee of the Bankrupt Estate of Nagarno & Talbert [2024] FedCFamC1F 19 also helpfully reviewed the authorities as to the principles to be applied in the determination of an application for summary dismissal. He confirmed that in considering whether proceedings have “no reasonable prospect” does not require a finding that the proceedings are bound to fail.
In my view, little has changed since my original decision to join the second respondent as a party to the proceedings. I then found that the wife has a triable cause of action and I continue to hold that view. The contention that the wife’s claim ought be summarily dismissed is, in my view, little more than an attempt to reagitate that decision.
The wife has identified property against which claim is made. Further, she has identified conduct by both the husband and the second respondent which she contends establishes her claims; for example, the transfer of the wife’s interest in H Street and the borrowing of funds from private lenders secured against properties held by the husband, for the benefit of the E Trust Fund.
What has emerged since that decision is the production of instruments, the effect of which is to exclude the husband and his family as general beneficiaries under that and other trusts. Those instruments were executed months after the parties’ physical separation. Those documents found the wife’s claim that they ought be set aside pursuant to s 106B of the Act.
In circumstances where it is alleged by the wife that the second respondent has executed instruments after the parties’ physical separation, the effect of which is to exclude the husband, the wife and their children as beneficiaries under trusts, which appear to hold significant assets, in my view, it cannot be maintained that the claim that those instruments be set aside has no reasonable prospect of success. Clearly, that is a serious issue only capable of resolution upon a testing of evidence.
The second respondent relied upon the decision of Mir to support his position that the wife’s case is fundamentally flawed. I do not accept that position in light of the comments of Ball J at [152] referred to earlier in this judgment. In my view, having regard to those comments, as well as the issues raised in Palermo, the propositions put by the wife as to the overarching agreement between the husband and his brother are clearly arguable. Having regard to those matters, I do not accept the proposition that the wife’s claim has no prospect of success.
I am well satisfied that there is a clear factual dispute between the parties as to the circumstances of the acquisition, conservation and improvement of property by the husband, the second respondent and/or entities controlled by them. Further, I am satisfied that there is also a factual dispute between them as to the entitlements of the husband, if any, to those properties. Whether the wife’s claims are upheld is a matter for determination only after a testing of evidence at final hearing. I am not in a position to, and will not, make any findings of facts at this interlocutory hearing.
Having regard to the above matters, I am satisfied that:-
·The wife ought have leave to rely upon the Amended Claim;
·The proposed fourth to sixth respondents ought be joined as parties to the proceedings; and further
·The second respondent’s application that the wife’s Amended Claim be summarily dismissed should be dismissed as I am not satisfied that it can be said that the wife has no reasonable prospect of successfully prosecuting her claim.
Accordingly, I made orders as sought to that effect.
I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johns. Associate:
Dated: 2 July 2024
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