Gormley & Gormley

Case [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:

  1. 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…

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Details
AGLC
Gormley & Gormley [2023] FedCFamC1F 296
Case
[2023] FedCFamC1F 296
Decision Date

CaseChat Overview and Summary

The matter of Gormley & Gormley involved a wife seeking to join her husband's father and the family company, C Pty Ltd, as parties to a family law proceeding. The wife's Amended Application in a Proceeding, filed on 18 April 2023, sought various declarations and orders regarding the family trust and properties, including that the husband's father hold his interest in the trust on trust for the husband and wife, and that the husband pay a cash payment equivalent to 47.5% of the net property pool. The husband did not oppose the joinder application, and both parties agreed to determine the application on the basis of the identified documents and oral submissions.

The primary legal issue was whether the husband's father and C Pty Ltd, as proposed additional parties, were necessary to be joined to the proceeding to determine all issues in dispute. Under Part 3.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, a party must be joined if their rights may be directly affected by the proceeding and their participation is necessary to determine all issues in dispute. The wife argued that the joinder was necessary to properly address the issues regarding the family trust and properties, which were central to the proceeding.

The court examined the evidence and submissions to determine if the joinder was necessary. It found that the husband's father and C Pty Ltd had significant interests in the trust and properties at issue. Their participation was deemed necessary to determine all issues in dispute, particularly concerning the trust's administration and the distribution of assets. The court concluded that the joinder was not appropriate at that stage, as the wife had not yet served the proposed additional respondents with a copy of her Amended Initiating Application. The wife was advised that she could still serve the additional respondents and that it was open for the trust to intervene in the proceedings to protect its interests.

The court dismissed the wife's application for joinder, stating that further trial dates would not be available until mid-2024 at the earliest if the current trial dates needed to be vacated. The court's decision underscored the importance of proper service of documents and the necessity for all relevant parties to be included in the proceeding to ensure a fair and complete resolution of the issues.

Orders

Orders of the court

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Background

Background to the litigation

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”.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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 Trust2. That it is declared that [the husband’s father] holds his interest in the [trust] on trust for the Husband and the Wife.Properties3. 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 JOINDERThe 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.