Gormley & Gormley
[2023] FedCFamC1F 296
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gormley & Gormley [2023] FedCFamC1F 296
File number: CAC 2949 of 2020 Judgment of: CAMPTON J Date of judgment: 21 April 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife seeks to join the husband’s father and a company pursuant to Pt 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Where the wife has not established a sufficient foundation for the proposed joinder – Where if the joinder application were allowed, the trial currently listed may not be able to proceed – Application for joinder dismissed. Legislation: Family Law Act 1975 (Cth) s 79
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 3.01, 3.03
Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009 HCA 27
B Pty Ltd and Ors & K and Anor (2008) FLC 93-380; [2008] FamCAFC 113
Hancock Family Memorial Foundation Ltd v Fieldhouse [No 3] [2010] WASC 223
Wayne & Dillon & Anor [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 44 Date of hearing: 19 April 2023 Place: Sydney Counsel for the Applicant: Ms Tulloch Solicitor for the Applicant: Orman Solicitors Solicitor for the Respondent: Mr Naumann, Walsh & Blair ORDERS
CAC 2949 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GORMLEY
Applicant
AND: MR GORMLEY
Respondent
order made by:
CAMPTON J
DATE OF ORDER:
21 April 2023
THE COURT ORDERS THAT:
1.The relief as sought by the wife in paragraph 1 of her Amended Application in a Proceeding filed 18 April 2023 as to the joinder of Mr B and C Pty Ltd is refused and 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).
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 Gormley & Gormley has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
Ms Gormley (“the wife”) by way of an Amended Application in a Proceeding filed on 18 April 2023 seeks:
1.That the following parties be joined as necessary parties for the purposes of financial matters related to these proceedings:
(a) [Mr B] (Respondent’s Father and Trustee of the [Gormley Family Trust]);
b) [C Pty Ltd] (Trustee of the [Gormley Family Trust]).
Mr Gormley (“the husband”) opposes the order for joinder of Mr B is the husband’s father (“the husband’s father”) and C Pty Ltd, (collectively, “the proposed additional respondents”).
The husband and the wife married in 2008 and separated on 28 February 2019. An order for divorce was made on 22 September 2020. They have two children, X who is currently 13 years old, and Y who is currently 10 years old. The husband is 39 years of age and the wife 38 years of age.
The husband’s father is approaching 84 years of age. The wife says he is in poor health.
C Pty Ltd is one of three trustees of the Gormley Family Trust (“the trust”). The husband and the husband’s father are the other trustees of the trust. The trust, from the time it was established, conducted farming operations on real properties which were formerly owned by the husband’s father and from 2014 were owned by the husband and the wife. It currently has assets by way of plant and equipment and farming products.
The wife commenced proceedings as to the adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) on 24 December 2020. The husband filed a Response on 9 February 2021.
The matter is in the Major Complex Financial Proceedings (“MCFP”) list.
On 12 August 2022, extensive orders and directions were made listing the proceedings for trial over five days commencing on 10 July 2023.
On 12 February 2023 the wife filed an Amended Initiating Application purporting or seeking orders to join the proposed additional respondents. She accepts that pursuant to r 3.03(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) it is necessary to seek leave by way of filing an Application in a Proceeding to progress such joinder, in circumstances where the proceedings have been listed for trial.
On 17 April 2023, the husband’s father was served with the wife’s Application in a Proceeding filed on 14 April 2023. That application, insofar as it affects the proposed additional respondents, mirrors the relief sought in paragraph 1 of the Amended Application in a Proceeding filed on 18 April 2023. The husband’s father was additionally served with the wife’s 178-page affidavit sworn on 2 March 2023 and filed on 14 April 2023. This same affidavit was filed by the wife on 2 March 2023. There was no evidence of service of the application for joinder or the affidavit on C Pty Ltd. Neither of the proposed additional respondents appeared at the hearing on 19 April 2023.
For the reasons that follow, the relief sought by the wife in paragraph 1 of her Amended Application in a Proceeding filed on 18 April 2023 is refused and dismissed. By way of the directions made on 19 April 2023, the relief sought by the wife in paragraphs 2 and 3 of her Amended Application in a Proceeding filed on 18 April 2023 is listed for hearing by Microsoft Teams on 25 May 2023.
DOCUMENTS RELIED UPON
The wife relied upon her Amended Application in a Proceeding filed on 18 April 2023 and her affidavit filed 14 April 2023. The husband did not read any documents in opposing the joinder application. Both the husband and the wife confirmed that they were content for the joinder application to be determined on the basis of the identified documents relied upon by the wife, and on each of their oral submissions.
RELEVANT BACKGROUND
C Pty Ltd was incorporated by the husband’s father in 1989 (albeit under a different name at that time) for the purposes of farming and trading. The husband was five years of age at this time. The husband and his father are the current directors of C Pty Ltd, after the husband was appointed as a director in 2007. They currently each hold one of the two issued shares in C Pty Ltd.
The trust was established by a deed made in 1994, when the husband was 10 years old. C Pty Ltd was then the sole trustee of the trust. At that time the husband’s father held, and continues to hold, the power of removal and appointment of trustees. The consent of the settlor was required to repeal, alter, or add to, any of the provisions of the deed. The trustee has an unfettered discretion to distribute any of the income or capital of the trust to the nominated beneficiaries of the trust. The husband, as a child of his father, and later the wife (as any wife of a child of the husband’s father) fell within a category of beneficiaries of the trust. The wife gives evidence that both she and the husband received distributions from the trust from 2013 to 2021.
By way of a deed made in 2002 between the settlor, C Pty Ltd (in its capacity as trustee of the trust) and the husband’s father (in his capacity as appointor of the trust), each of the husband’s father and the husband were appointed as additional trustees of the trust. The husband was 18 years old at that time. They each remain the current trustees of the trust.
C Pty Ltd was a vehicle by which the husband’s father undertook farming and trading from the date it was incorporated, in addition to its role as trustee of the trust. The wife in her evidence said that the husband asserts C Pty Ltd ceased trading on its own behalf in or about 2014. The wife puts this contention into issue. It is uncontroversial that C Pty Ltd has continued after 2014 in its capacity as a trustee of the trust.
The wife gives evidence in her affidavit that she lived on the farming properties then owned by the husband’s father, with the husband and his parents for two or three days each week from early 2002. She said that around this time she “commenced working a couple of days a week on the [Gormley] farms” for which she was not paid. Her affidavit records that she and the husband “moved into the [D Property]” when they married in 2008. She said that from 2008, she and the husband “began managing the farms together with less input from [Mr B] then before we were married.” She gives evidence as to thereafter working “a minimum of [seven] hours a day [seven] days a week”, identifying the tasks she said she undertook on the farm “for no pay”.
The affidavit evidence of the wife progresses to record that in 2012 the husband’s father permitted her to be a signatory to C Pty Ltd’s bank accounts and that thereafter she became “responsible for all financial aspects of the farming business”. The wife said that in 2013 and 2014, she and the husband began making decisions about purchasing stock plant and equipment for the farms, although they informed the husband’s father of those decisions.
The wife gave evidence in her affidavit that she, the husband and the husband’s father engaged lawyers over a two year period prior to mid-2014, when the husband’s father transferred the title of the “[D Property, E Property, F Property and G Property] properties” to the husband and wife absent any monetary consideration. The wife says that she was unaware as to the value of the properties at the time of the transfer.
At paragraph 31 of her affidavit the wife makes a broad assertion as to her understanding that by 2014 the husband’s father “had already gifted [the husband and wife] the stock and the […] equipment”. She does not particularise how the trust perfected such gift. It is her evidence that she and the husband had been “treating the stock plant and equipment as if it was [their] own for many years”. Her evidence it is that the income produced by the farm grounded the acquisition of the majority of the plant and equipment presently owned by the trust, and none of the stock as currently owned by the trust was in existence at the time of the transfer of the real properties in 2014.
The trial directions made 12 August 2022 record the following notations:
A.In compliance with the directions made 6 June 2022 the parties have filed on 5 July 2022 a draft joint balance sheet and on 7 July 2022 a joint statement of facts and contested facts.
B.The wife contends that a discretionary family trust established by deed in 1994 by the husband’s father of which the husband is the appointer ought to be declared the property of the husband or of the husband and the wife. This contention is put into issue by the husband.
C.The joint balance sheet filed 5 July 2022 records that a property at [H Street, J Town] in owned in conjunction with the husband’s father and that the discretionary trust identified earlier in these notations is a trading trust for the purposes of farming operations having underlying assets by way of a substantial quantity of plant and equipment, […] and other farming products.
D.The wife contends at this time that it is not required for the purpose of any s 79 hearing to value the interests of the parties in the said discretionary trust.
E.The wife has today been referred to the provisions of r 3.01 of the Federal Circuit and Family Court of Australia Rules as to necessary parties to proceeding in the circumstances of this case.
F.As at today she contends that it is not necessary to join the husband’s father to the proceedings or to provide him with notice of the proceedings.
G.The wife contends that a significant quantity of requests have made of the husband for disclosure of relevant documents and information that have not been the subject of sufficient or appropriate response. The husband puts such allegation into issue.
The wife takes issue with the accuracy of some of the matters recorded in the notations made on 12 August 2022.
She contends that the value of the property of the parties available for adjustment is in excess of $30 million. The husband contends that it is in the range of $30 million. They each agree that the value of the trust is approximately $4 million.
The wife’s affidavit records that in 2021, two years after the parties’ separation, the husband asserted that the assets of the trust were not part of the pool of property available for adjustment between them. She asserts that by way of letter from his solicitor on 7 June 2021, the husband contended that his father retained control of the trust.
The case of the wife is summarised in the last paragraph of her affidavit in the following terms:
47. Given the contributions that [the husband and wife] have made to the assets of the [trust] and the conduct of [the husband and the husband’s father] in relation to the trust, I now seek a declaration that [the husband’s father] holds his interest in the [trust] on trust for me and [the husband]. For that reason, I seek to join [the husband’s father] and [C Pty Ltd] to these proceedings.
The relevant relief sought by the wife in her Amended Initiating Application filed on 12 February 2023 in so far as it is relevant to the joinder application is as follows:
Declaration re the [Gormley] Family Trust
2. That it is declared that [the husband’s father] holds his interest in the [trust] on trust for the Husband and the Wife.
Properties
3. That within 28 days from the date of these Orders, the husband pay to the wife a cash payment which is equivalent to 47.5% of the net property pool.
4. That contemporaneously with Order 2, the wife is to do all acts and things and sign all documents necessary to transfer to the husband all her right, title, and interest in the following Properties:
a. “[D Property]” (229 ha) [2 H Street, J Town] NSW,
b. “[K Property]” (691 ha) [1 H Street, J Town] NSW,
c. “[E Property]” (304 ha) [L Street, M Town] NSW,
d. “[F Property]” (131 ha) [3 H Street, M Town] NSW,
e. “[G Property]” (408 ha) [N Street, M Town] NSW.
5. That contemporaneously with Orders 2 and 3, the husband will cause to discharge and refinance the mortgages over [K Property] and joint mortgage owing to [the husband’s father] into his sole name and will indemnify the wife from all current and future liabilities.
6. That the Husband and [the husband’s father] on behalf of the [trust] transfer all their right title and interest to the Wife in the two [commercial vehicles].
The parties were advised that should the application of the wife for joinder be successful such that the current trial dates would need to be vacated, further trial dates would not be available until mid-2024 at the earliest.
THE APPLICATION FOR JOINDER
The law
Part 3.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) sets out the procedure for the joinder of a party to the proceeding. Rule 3.01 prescribes:
3.01 Necessary parties
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
Example:If a party seeks an order of a kind referred to in section 90AE or 90AF of the Family Law Act, a third party who will be bound by the order must be joined as a respondent to the proceeding.
The rule does not identify the matters to be considered in the exercise of discretion to join a party to a proceeding. It mandates that a necessary party to a proceeding must be joined. The rule prescribes satisfaction of two conjunctive thresholds, being:
(a)Firstly, that the party who is proposed to be joined has rights that will be directly affected by the proceeding; and
(b)Second, that their participation in the proceedings are necessary to determine all issues in dispute in the proceeding.
If the evidence grounds such satisfaction, the rule obliges a joinder.
Rule 3.01 reflects longstanding jurisprudence that a party may only be joined to proceedings if they are directly relevant to the outcome of the matter.
The word “necessary” for the purposes of a predecessor of the r 3.01 was described by Warnick J in Wayne & Dillon & Anor [2008] FamCAFC 204, as meaning:
...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”.
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.”
In Hancock Family Memorial Foundation Ltd v Fieldhouse [No 3] [2010] WASC 223, Le Miere J helpfully referred to relevant authorities and articulated, in precise terms, why it is necessary for a party seeking to join a third party to litigation to establish an arguable case, in the following terms:
27.The applicant on a joinder application must show that there is an arguable case sufficient to resist the entry of summary judgment by the parties sought to be joined. It would be futile to order that a person be joined as a defendant if the material before the court disclosed that if the person, having been joined as a defendant, applied for summary judgment the application would succeed.
(Citations omitted)
The Full Court in B Pty Ltd and Ors & K and Anor (2008) FLC 93-380 held as follows:
52. We do not accept that it is proper to allow joinder of third parties merely upon the formulation of a paragraph in, or to be added to, an application, on the basis that at trial facts to support the application may be asserted and proved. Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.
The wife in support of this joinder application has not provided a document similar to a pleading to the Court, the husband or the proposed additional respondents, which sets out a statement of contentions of fact and/or law that would give rise to the relief that she seeks. Indeed, with the greatest of respect to the wife, the nature of the relief she seeks is anything but approaching precise form. At the current time such neglect occasions a fundamental failure to afford procedural fairness.
Difficulty is encountered in distilling the foundations for, or the utility of, the declaration sought in the terms as presently constructed and prosecuted in the wife’s amended Initiating Application. The fact and terms of the “interest” (whatever that may be) held by the husband’s father in the trust are not identified or particularised. The wife has not identified the legislation or legal principle grounding the declaration as sought.
A declaration is not an order. The wife submitted that the object of the declaration as sought is to ensure that the trust is identified and valued as property of the husband and the wife for the purposes of the s 79 hearing. In reality, such a finding can be achieved without the trust being a party to the proceeding. The relief sought by the wife so as to achieve a “cash payment [from the husband] which is equivalent to 47.5 [per cent] of the net property pool” can be satisfied from the other property of the parties, without accessing the assets of the trust. The joinder of the trust for the purpose as identified by the wife in submissions fails to satisfy the threshold mandated by r 3.01 the Rules, in that the participation of the trust as a party to the proceedings is not necessary to determine this issue in the proceedings.
A further critical consideration as to whether a proposed additional party should be joined to proceedings, as mandated by r 3.01, is whether an order is sought against them. The only order currently sought against the proposed additional parties is at paragraph 6 of the wife’s Amended Initiating Application, being the transfer in specie in her favour of “two [commercial vehicles]” owned by the trust. The wife gives no admissible evidence in her affidavit relied upon for the purpose of this application as to:
(a)the value of each of these items; or
(b)any request made of the husband, his father or the trust to transfer to her the specific items (or any refusal of such request if made); or
(c)why discretion would be grounded to achieve such items in specie; or
(d)why she could not acquire similar items with the fruits of her s 79 claim.
The current presentation of the wife’s evidence to satisfy the thresholds mandated by r 3.01 as to obtaining the items in specie from the trust are tenuous at best. I am not satisfied on the evidence the wife has relied upon and in all of the circumstances of this case, that the wife has established a sufficient foundation for the joinder of the husband’s father and C Pty Ltd.
If I am in error in achieving that conclusion, the wife gives no explanation as to the reasons for her delay from mid-2021 until the current time in seeking the joinder of the additional proposed respondents. In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, the High Court explained the need for courts to take into account case management principles when exercising discretion in procedural applications such as this, even to the prejudice of a party to a particular proceedings. That decision highlighted that where a party has had sufficient opportunity to plead his or her case, the Court may make “a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to the other litigants” (at [94]). As recorded above, the wife commenced these proceedings more than two years ago. The wife’s contention as to the inclusion of the trust in the property available for adjustment between the parties has been a live issue since at least July 2021. In my view, she has had ample time to plead with particularity her case pertaining to the trust and the husband’s father and has not done so.
The notion that parties to a proceeding are not entitled to consume an unlimited amount of public resources in the pursuit of their own interests is consistent with the obligations imposed by this Court as contained in the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”). I am mindful of the obligations imposed on the Court and parties to proceedings by way of ss 67 and 68 of the FCFCOA Act and r 1.04 of the Rules, to promote the overarching purpose of the Rules and of the practice and procedure provisions. This Court has a responsibility to ensure that litigation and management of its workload occurs according to law, and as efficiently and inexpensively as possible. In that sense, this Court is required to efficiently use its judicial and administrative resources, and exercise its business to ensure the disposal of all proceedings in a timely manner that is proportionate to the importance and complexity to the matters in dispute.
It is concerning that should the wife’s joinder application be allowed, there is a very real possibility that the trial will not be able to proceed as listed in July 2023 and that the Court would be unable to allocate further trial dates until well into 2024, being more than five years after the parties separated and three years after these proceedings commenced. To my mind, the expense (both financial and in terms of the time and effort the parties have invested in these proceedings) of delaying the trial event so as to permit the proposed additional respondents to be joined is disproportionate to the impact of that joinder to achieve an in specie transfer of two items of plant and equipment, whose value is not significant when assessed against the total value of the pool available for adjustment. These factors weigh against permitting the wife’s joinder application.
During hearing the wife expressed concern that the attitude of the joinder of the husband’s father and of C Pty Ltd to the proceedings was unknown at the time of the hearing of her application. The wife is yet to serve either proposed additional respondents with a copy of her Amended Initiating Application filed 12 February 2023. That course is available to her as she is advised. Upon receiving notice of the relief she seeks, it is always open for the trust to apply pursuant to the Act and Rules to intervene in the proceedings to protect its interests, should it consider it prudent.
CONCLUSION
For the forgoing reasons, paragraph 1 of the wife’s Application in a Proceeding is refused and dismissed.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 21 April 2023
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