HAWKING & HAWKING - [2018] FamCA 890

FAMILY COURT OF AUSTRALIA

HAWKING & HAWKING

[2018] FamCA 890

FAMILY LAW – PROPERTY – Application for summary dismissal – Where the Second Respondent, who is the father of the Respondent husband, seeks an order that the proceedings against him be summarily dismissed – Where the Second Respondent, in the alternative, seeks an order that the orders sought by the Applicant wife as against him be struck out – Where the Court could not be satisfied that the contentions of the Applicant wife are frivolous, vexatious or embarrassing – Application dismissed.

Family Law Act 1975 (Cth), ss. 45A, 102Q, 102QA, 106B

High Court Rules 2004, r. 27.09.5
Family Law Rules 2004, rr. 10.12, 11.10

Agar v Hyde (2000) 201 CLR 552
Bahar v Sohrab [2017] FamCA 792
Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256
Chifley & Ha [2017] FamCA 683
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Harris v Dewell [2018] FLC 93-839
Riemann & Riemann (No. 3) [2017] FamCA 911
Seidler v Carroll & O’Dea [2013] NSWSC 338
Spellson v George (1992) 26 NSWLR 666
State of New South Wales v Spearpoint [2009] NSWCA 233
Walton & Gardiner (1993) 177 CLR 378
Westpac Banking Corporation v Michael Vincent Bourke & Anor [2012] NSWSC 111

APPLICANT:

Mr Hawking

RESPONDENT:

Ms Hawking

FILE NUMBER:

SYC 8389 of 2016

DATE DELIVERED:

2 November 2018

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

McClelland J

HEARING DATE:

18 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Richardson SC

SOLICITOR FOR THE APPLICANT:

Barkus Doolan

COUNSEL FOR THE RESPONDENT:

Mr Cummings SC

SOLICITOR FOR THE RESPONDENT:

Solari & Stock Lawyers

Orders

The Second Respondent’s Application in a Case filed on 30 August 2018 be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hawking & Hawking has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 8389 of 2016

Mr Hawking

Applicant

And

Ms Hawking

Respondent

REASONS FOR JUDGMENT

Introduction

In this matter, the Second Respondent to the substantive proceedings seeks that the proceedings against him be summarily dismissed, or in the alternative, that the orders sought by the Applicant to the substantive proceedings which seek relief as against him be struck out.
For the purposes of this interim matter, the Applicant in the substantive proceedings, while she is the Respondent in this application will be referred to as the “Applicant”, while the Second Respondent in the substantive proceedings, who is the Applicant in this application, will be referred to as the “Second Respondent”. The First Respondent in the substantive proceedings, who is the husband of the Applicant, and supported this application Respondent, will be referred to as the “First Respondent”.

Applications

The Second Respondent seeks that orders be made in accordance with his Application in a Case filed on 30 August 2018, as follows:
THE COURT NOTES:
A. The following definitions apply for the purposes of these Orders:
A.1 "Applicant” means the Applicant Wife in the substantive property settlement proceedings namely, [Ms Hawking];
A.2 "Second Respondent" means the Second Respondent in the substantive property settlement proceedings namely, [Mr Hawking].
IT IS ORDERED:
1. That the proceedings against the Second Respondent be summarily dismissed.
2. That the Applicant pay the Second Respondent's costs of and incidental to the proceedings including this Application in a Case.
3. In the alternative to Orders 1 and 2 above, an Order striking out:
3.1. paragraphs 4 to 7 of the final orders sought in the Further Amended Initiating Application filed 30 January 2018;
3.2. paragraphs 4 to 7 and 11 of the interim or procedural orders sought in the Further Amended Initiating Application filed 30 January 2018; and
3.3. the Applicant's Amended Points of Claim filed 31 July 2018.
4. That the Applicant pay the Second Respondent's costs of this Application in a Case.
The relief sought by the Applicant, as against the Second Respondent, is set out in her Amended Points of Claim, as follows:
1. Declaration that the First Respondent is the beneficial owner of all of the ordinary shares in [B Pty Ltd] ACN… ("[BPL]").
2. Further or in the alternative, declaration that the First Respondent is the beneficial owner of 24 ordinary shares in [BPL] ("the 24 shares").
3. Further or in the alternative, declaration that the Second Respondent holds the 24 shares on trust for the First Respondent.
…
5. Further or in the alternative that the transfer of 24 shares in [BPL] by the First Respondent to the Second Respondent dated 21 October 1998 be set aside.
6. That the 50% interest of the Second Respondent in the property situated at [C Street, Suburb D] NSW having folio identifier … (“the former matrimonial home”) shall be transferred to the Applicant for fair market value, payable to the Second Respondent from the Applicant’s entitlements to a lump sum property adjustment order against the First Respondent, such relief more particularly described at paragraph 6 of the Final Orders sought in the Further Amended Initiating Application filed 30 January 2018.
7. That the Applicant shall have exclusive occupation of the former matrimonial home pending its transfer (or on the First Respondent's application, its sale) and that none of the parties shall further encumber the former matrimonial home without the written consent of the other parties.

Evidence

The Second Respondent relied upon the following documents:
a)Orders made by Registrar Hayward on 19 December 2017;
b)Orders made by McClelland J on 14 June 2018;
c)Orders made by McClelland J on 20 July 2018; and
d)The Applicant's Points of Claim filed on 30 January 2018.
The Applicant relied upon the following documents:
a)Amended Points of Claim filed on 31 July 2018 (Annexure “A” to these Reasons for Judgment);
b)Her Affidavit filed on 16 December 2016;
c)Her Affidavit filed on 12 December 2017; and
d)The First Respondent’s Affidavit filed on 17 February 2017 (paragraph 52).

Background

The Applicant and the First Respondent are the spouse parties in these proceedings.
The Second Respondent is the father of the First Respondent.
The Applicant and First Respondent commenced cohabitation in 1992. At the commencement of cohabitation, the Applicant was working full time as a health professional and the First Respondent was working full time as a tradesman.
The Applicant and First Respondent have three children:
a)Mr X, born in 1994;
b)Ms Y, born in 1996; and
c)Z, born in 2001.
In mid-1994, the First Respondent purchased equipment and worked full time for himself in construction.
On 9 February 1996, the company B Pty Ltd (“BPL”) was registered.
On 12 February 1996, the First Respondent signed and caused to be lodged with the Australian Securities Commission notification that he was appointed as the sole director and secretary of BPL. There are 100 issued and paid ordinary shares in BPL.
On 12 February 1996, the First Respondent, as director of BPL, signed and caused to be lodged with the Australian Securities Commission notification as to the following allotment of those 100 ordinary shares:
a)24 shares to the First Respondent;
b)24 shares to the First Respondent's sister, Ms F Hawking; and
c)52 shares to an accountant, Mr E.
The Applicant says that, from no later than 12 February 1996, BPL acquired, or acquired the use of, the First Respondent’s equipment. Since that time, the Applicant says that the First Respondent has engaged in the business of equipment hire to the construction industry through BPL.
In mid-1997, the Applicant and the First Respondent separated for a period of several months, livings apart throughout that period.
In late-1997, the Applicant and the First Respondent and recommenced cohabitation.
On 20 February 1998, the Second Respondent was appointed as the sole director and secretary of BPL.
On 21 October 1998, the Applicant contends that:
a)Mr E transferred legal title to his 52 shares in BPL to the Second Respondent;
b)Ms F Hawking executed a document acknowledging that she held her 24 shares in BPL on trust for the Second Respondent; and
c)The First Respondent executed a transfer of 24 shares to the Second Respondent, for which $24 was recorded as consideration.
In relation to those transactions, the Applicant contends, at paragraph 26 of her Amended Points of Claim:
The transfer of those 24 shares to the Second Respondent and the removal of the First Respondent from office as director in [BPL] was a device of the First and Second Respondents intended to disguise the First Respondent's beneficial ownership of the ordinary shares in [BPL] (or in the alternative the 24 shares) and its role as director from any Court called upon to determine any financial claim arising from the de facto relationship and future marriage of the First Respondent with [the] Applicant, and to protect the said beneficial interest from any such claim.
The Applicant contends that that there has been no valid disclaimer or relinquishment of the First Respondent’s beneficial interest in his 24 shares at any time and, in particular, during the period 12 February 1996 to 21 October 1998. The Applicant further contends that, at all material times since 12 February 1996, the First Respondent has been the beneficial owner of 24 shares in BPL.
The Second Respondent contends that, on the Applicant’s own evidence, by 21 October 1998, the First Respondent no longer owned any shares in BPL and would, therefore, not be entitled to a declaration that the First Respondent has any interest in those shares. In this way, Senior Counsel for the Second Respondent submitted that “Not only does the claim against the Second Respondent not have a reasonable likelihood of success, it is clearly hopeless”.
In 1999, the Applicant and the First Respondent were married.
In 2002, the company G Pty Ltd (“GPL”) was registered. The Second Respondent was registered as the sole director of GPL. There are 794,033 issued shares in GPL, one share is owned by the Second Respondent and the remainder are owned by BPL.
The Applicant contends that, at all material times since 20 February 1998 to date, the First Respondent has been a director of BPL and GPL, as defined by the Corporations Act 2001, without a valid appointment to that office, in that:
a)The First Respondent acted in the position of director; and/or
b)The Second Respondent was accustomed to act in accordance with the First Respondent's wishes and instructions.
In that way, the Applicant says that BPL, including its subsidiary GPL, is the “alter ego” of the First Respondent by reason of the First Respondent's practical control of the said companies, including dealing with their assets and profits. The Applicant says that, on many occasions during her relationship with the First Respondent, he referred to BPL as “our company”, being a reference to those spouse parties, or “my company”, but never as the Second Respondent’s company.
The Applicant contends that, since 21 October 1998, and in the case of GPL, since 2002, the First Respondent has received benefits from BPL at his direction and discretion, including but not limited to:
a)The use and enjoyment of assets of the companies;
b)Financial benefits in the form of personal expenses and liabilities paid by the companies on his behalf;
c)Financial benefits in the form of assets acquired on his behalf and for his personal use and enjoyment, either by the companies directly or by the companies advancing money to him for that purpose;
d)Financial benefits in the form of dividends allocated to the Second Respondent but drawn from the bank and credit card accounts of the companies by him and used by him at his will; and
e)Financial benefits in the form of loans made to him by the companies at his will.
On 26 October 2014, the Applicant and the First Respondent separated on a final basis.
On 16 December 2016, the Applicant commenced the substantive proceedings. In the Initiating Application filed on that date, no relief was sought as against the Second Respondent.
On 9 October 2017, the Applicant filed an Amended Initiating Application, which included the following orders:
4. That pursuant to Section 106B of Family Law Act, the Court set aside the transfer of 24 Ordinary Shares in the company [B] Pty Limited, ABN …, from [Mr H Hawking] to [Mr Hawking] on 21 October 1998.
…
11. That [MR HAWKING] be joined as Respondent 2 in these proceedings.
On 19 December 2017, Registrar Hayward ordered the Applicant to file and serve Points of Claim by 30 January 2018.
On 30 January 2018, the Applicant filed and served a Points of Claim and a Further Amended Initiating Application.
On 2 February 2018, the Second Respondent wrote to the Applicant and identified what were described as "obvious deficiencies" with her Points of Claim and invited her to file and serve an Amended Points of Claim. On 1 March 2018, the Applicant responded to that correspondence, disagreeing and declining the invitation to file and serve an Amended Points of Claim.
On 14 June 2018, I made the following orders:
1. The proceedings, insofar as they affect the Second Respondent, shall be conducted by way of pleadings.
2. Within 21 days from the date of these orders, the Applicant file and serve Amended Points of Claim setting out, succinctly:
a. All relevant facts and contentions of law upon which the Applicant relies, in respect of each final order sought against the Second Respondent and in relation to the Second Respondent's company, [B Pty Ltd] (including the section 1068 order); and
b. The contended source or sources of jurisdiction and power, in each instance, in respect of each final order sought against the Second Respondent and in relation to the Second Respondent's company, [B Pty Ltd].
On 20 July 2018, I made further orders, by consent, as follows:
1. That the Orders made by the Honourable Justice McClelland on 14 June 2018 be amended to extend the time for the parties to file documents as follows:
1.1. That the Applicant file and serve Amended Points of Claim by 4.00pm on 31 July 2018 addressing those matters referred to at Order 2 of the Orders made 14 June 2018;
1.2.1n the event of either of the Respondents wishing to make an Application for the Points of Claim to be struck out, either in whole or in part, any such Application be filed by 4.00pm on 31 August 2018.
On 31 July 2018, the Applicant filed and served an Amended Points of Claim.
Senior Counsel for the Second Respondent submitted that:
… the Applicant's Amended Points of Claim is manifestly deficient and fails to disclose any reasonable cause of action against the Second Respondent. This is in circumstances where the Applicant has now been afforded two opportunities by the Court to file and serve a Points of Claim which properly articulates the basis for the relief sought against the Second Respondent.

The parties’ respective arguments

I have earlier set out the relief sought by the Applicant as against the Second Respondent, which forms paragraphs 1 to 3 and 5 to 7 of her Amended Points of Claim.
As noted, the Second Respondent, as supported by the First Respondent, seeks orders to the effect that:
a)The proceedings against him be summarily dismissed on the basis that the Applicant's claims have no reasonable prospect of success and are frivolous and vexatious; or
b)In the alternative, the Applicant's Amended Points of Claim and paragraphs of the Applicant's Further Amended Initiating Application seeking relief against the Second Respondent be struck out on the basis that they disclose no reasonable cause of action and are embarrassing.
In summary, the detailed written submissions of the Second Respondent contend that the Applicant’s Amended Points of Claim document is deficient in that it fails to properly appraise the other parties of the case against them and that, in so far as any such case were to be particularised, it has no reasonable prospects of success. It was asserted that the contentions of law and fact set out in the Applicant’s Amended Points of Claim do not establish the existence of a constructive or resulting trust in favour of the First Respondent in respect to shares in BPL. Similarly, it was further asserted that those contentions of law and fact do not establish a basis upon which a share transfer made by the First Respondent to the Second Respondent on 21 October 1998 should be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”).

The issue of a constructive or resulting trust

The Second Respondent’s submissions in respect to the Applicant’s allegations of the existence of a constructive or resulting trust are set out in paragraphs 22 to 32 of his “Outline of Submissions” document, as follows:
22. Allegations of a constructive or resulting trust. The history of the shareholding in [BPL] is set out at paragraphs 17 to 19 of the Amended Points of Claim. For present purposes it is relevantly alleged that:
(a) on 12 February 1996:
(i) 24 shares in [BPL] were issued to the First Respondent, 24 shares were issued to the First Respondent's sister, and 52 shares were issued to the family's accountant (paragraph 17(e)); and
(ii) the family's accountant executed a document acknowledging that he held his 52 shares in [BPL] on trust for the Second Respondent (paragraph 17(i)); and
(b) on 21 October 1998:
(i) the family's accountant transferred legal title to his 52 shares in [BPL] to the Second Respondent (paragraph 17U));
(ii) the Second Respondent's sister executed a document acknowledging that she held her 24 shares in [BPL] on trust for the Second Respondent (paragraph 17(k)); and
(iii) the First Respondent transferred his shares in [BPL] to the Second Respondent (paragraph 19(b)).
23. Pausing there, on the Applicant's own case the following has occurred by 21 October 1998:
(a) the family's accountant no longer holds his 52 shares on trust for the Second Respondent. The transfer of the legal title from the family's accountant to the Second Respondent means that he owns those shares absolutely, that is, he is both the legal P'}P beneficial owner of the shares;
(b) the Second Respondent's daughter holds her 24 shares on trust for the Second Respondent; and
(c) the First Respondent no longer owns his 24 shares in [BPL] as he has transferred them to the Second Respondent on 21 October 1998.
24. Accordingly, by 21 October 1998, the First Respondent no longer owned any shares in [BPL], the Second Respondent’s shares in [BPL], and the Second Respondent's daughter held 24 shares in [BPL] on trust for the Second Respondent. Therefore, on the Applicant's own case, she would not be entitled to a declaration that the First Respondent has any interest in the shares.
25. Notwithstanding this plainly correct analysis of the Applicant's own allegations, at paragraphs 17 to 19 of the Amended Points of Claim the Applicant asserts at paragraph 21, without articulating any legal or factual basis, that "[a]t all material times from 12 February 1996 until the present date the First Respondent has been the beneficial owner of the 24 shares." As well as being embarrassing, the bare assertion at paragraph 21 is also plainly incorrect on any analysis of the allegations at paragraphs 17 to 19 of the Amended Points of Claim. Not only does the claim against the Second Respondent not have a reasonable likelihood of success, it is clearly hopeless.
26. The Amended Points of Claim then alleges at paragraphs 24 to 25 that [BPL] is the "alter ego" of the First Respondent because of the "practical control" he is said to have exercised in relation to [BPL]. It is not explained in the Amended Points of Claim, nor could it be, how the concept of "alter ego" gives rise to a constructive or resulting trust. The allegation fundamentally misunderstands rudimentary principles of property and company law. Even if it were accepted that the First Respondent exercised "practical control" over [BPL], that may make him a shadow or de facto director of [BPL] but it would not make him a shareholder, or somehow give him a beneficial interest in the shares: see the definition of "director" in s 9 of the Corporations Act 2001 (Cth) and Austin and Ramsay, Ford, Austin & Ramsay's Principles of Corporations Law (16th edition, 2015) at [8020]. The Applicant's allegation is also at odds with the recent decision of the Full Court of the Family Court in Harris v Dewe1 [2018] FamCAFC 94 at [68] where it was said:
Control is not sufficient of itself. What is required is control over a person or entity who, by reason of the powers contained in the trust deed can obtain, or effect the obtaining of, a beneficial interest in the property of the trust. In our respectful view, it is in that sense, that Finn J speaks of "some lawful right to benefit from the assets of the trust".
27. Whilst Harris v Dewe1 concerned a trust, it is authority for that proposition that control in itself is not sufficient to give rise to a proprietary interest. Even if the First Respondent exercised "practical control" over [BPL], he did not have any lawful right to benefit from those assets, nor is any such right even alleged.
28. It is alleged at paragraph 26 and the Amended Points of Claim that:
The transfer of 24 shares to the Second Respondent and the removal of the First Respondent from office as director of BPL was a device of the First and Second Respondent intended to disguise the First Respondent's beneficial ownership of the ordinary shares in BPL (or in the alternative the 24 shares) and his role as director from any Court called upon to determine any financial claim arising from the de facto relationship and future matter of the First Respondent with Applicant), and to protect the said beneficial interest from any such claim.
29. The only particular in support of such a serious allegation which is tantamount to an allegation of fraud on the part of the First and Second Respondents, is an allegation that the Second Respondent separated from his de facto partner in 1996 and that the First Respondent said to the Applicant "I am never going to let that happen to me (referring to the property settlement)."
30. When regard is had to the objective facts as alleged by the Applicant, the assertion that the transfer of shares and change of directors was "a device" to "disguise the First Respondent's beneficial ownership . . . from any Court" is absurd. The relevant transfer of the shares in [BPL] occurred on 21 October 1998, that is:
(a) two years after the property settlement between the Second Respondent and his de facto partner, which is supposedly the catalyst for this transaction;
(b) nine months before the parties became engaged to be married;
(c) ten and a half months before the parties married;
(d) sixteen years before the parties separated on a final basis; and
(e) eighteen years before these proceedings were commenced.
31. In any event, it is not clear from the Amended Points of Claim, or as a matter of law, how the allegation in paragraph 26 could be give the First Respondent a beneficial interest in the shares or be said to support the claims of a constructive or resulting trust.
32. At paragraphs 27 to 29 of the Amended Points of Claim the Applicant seeks a declaration that the First Respondent beneficially owns all or 24 of the shares in [BPL] and alleges that 24 shares in [BPL] are held on a constructive or resulting trust for the First Respondent. There is no factual or legal basis to support the relief sought in paragraphs 27 to 29 of the Amended Points of Claim.

In reply, Senior Counsel for the Applicant clarified that it is not the case that his client is asserting that there is a resulting trust in respect to 100 per cent of the shares in BPL, but rather, that there is a resulting trust in respect of 24 per cent of the shares which, Senior Counsel for the Applicant contended has been properly pleaded in the Amended Points of Claim.
In that respect, Senior Counsel for the Applicant contends that the Amended Points of Claim adequately particularises that, unlike the 76 shares in BPL which were allocated to Ms F Hawking and Mr E, the 24 shares that were originally allocated to the First Respondent were not subject to a declaration of trust in favour of the Second Respondent. It is contended that, in the absence of such a declaration of trust, the First Respondent is the prima facie beneficial owner of those shares.
It was further contended that the Amended Points of Claim adequately particularises that, as a result of the 24 shares being transferred by the First Respondent to the Second Respondent for no almost consideration, an implied trust has been created. It was asserted that relevant contentions of law and fact in respect to that issue have been adequately particularised in the Amended Points of Claim and, further, that it cannot be said that that aspect of the Applicant’s claim has no reasonable likelihood of success.
In respect to the Applicant’s claims as to the existence of a resulting or constructive trust, Senior Counsel for the Applicant referred to paragraphs 28 and 29 of his client’s Amended Points of Claim as adequately particularising the basis of those claims. The relevant circumstances at the time of the transactions in question, it was contended, were that the Applicant and the First Respondent were contemplating marriage after a period of difficulty in their relationship. Those circumstances, it is contended, are adequately particularised in the Amended Points of Claim.
In relation to the Applicant’s claim in respect to 100 per cent of the shareholding in BPL and GPL, Senior Counsel for the Applicant referred to the contentions set out in his client’s Amended Points of Claim to the effect that the First Respondent has continued to exercise control over that company has received various benefits from it at his direction and discretion. In this way, the Applicant says that BPL and GPL are the “alter ego” of the First Respondent.
As stated, in reply to that issue, Senior Counsel for the Second Respondent referred to the decision in Harris v Dewell [2018] FLC 93-839 as authority for the fact that control of an entity, itself, is not sufficient to prove ownership.

Section 106B proceedings

The relevant facts and contentions of law as to the s 106B proceedings are set out in paragraphs 30 to 41 of the Applicant’s Amended Points of Claim. Essentially, the Applicant seeks to set aside a transaction that occurred on 21 October 1998, when the First Respondent transferred his shareholding of 24 shares in BPL to the Second Respondent. Section 106B of the Act provides:
Transactions to defeat claims
(1) In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A) If:
(a) a party to a marriage, or a party to a de facto relationship, is a bankrupt; and
(b) the bankruptcy trustee is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1B) If:
(a) a party to a marriage, or a party to a de facto relationship, is a debtor subject to a personal insolvency agreement; and
(b) the trustee of the agreement is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(2) The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3) The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition. …
Senior Counsel for the Second Respondent referred to a decision that I gave in the matter of Riemann & Riemann (No. 3) [2017] FamCA 911, where I held that, in order to succeed in an action under s 106B of the Act, it is necessary to establish, not only anticipation of a claim under the Act, but also anticipation of an order being made under the Act.
Reference was also made to the decision of Rees J in Chifley & Ha [2017] FamCA 683, where her Honour dismissed an application to join a third party for the purposes of prosecuting a claim under s 106B of the Act. At [59], her Honour stated:
At the time of the transaction in 2011, the parties had not separated and they did not separate until May 2013. No proceedings were, at the time of the transaction, anticipated.
In relation to those decisions, Senior Counsel for the Second Respondent submitted that:
The facts currently before the Court are a far more extreme case than either Reimann or Chifley. In Reimann the transaction was about a year before the commencement of proceedings and in Chifley it was about two years before the commencement of proceedings. In the present case, the transaction took place sixteen years before the parties separated on a final basis and eighteen years before proceedings were commenced. Moreover, at the time that the transaction was entered into in 1998, the parties were in a de facto relationship and it was not until over a decade later on 1 March 2009 that the referral of State power over financial disputes arising from de facto relationships came within the jurisdiction of the Act. In these circumstances, it is absurd to suggest that the transaction was made or proposed to be made to defeat an existing or anticipated order in proceedings under the Act, or that the transaction was likely to defeat any such order. The s 106B case against the Second Respondent is clearly hopeless.
Senior Counsel for the Applicant conceded that, “at first blush”, it is difficult to see how s 106B of the Act could apply to a transaction that occurred some two decades earlier and in circumstances where the parties were not, at that time, married. However, it was noted that the Applicant’s claim is based on the second limb of s 106B, that is, that the transaction had the effect of defeating an anticipated order. In that respect, it was submitted that there is no time limitation set out in the section.
It was further contended that it is relevant that that transaction was made in the context of the Applicant and the First Respondent’s contemplation of marriage, in circumstances where they had experienced a period of discord that had resulted in the suspension of their relationship before they, once again, recommenced living together. In that respect, Senior Counsel for the Applicant made oral submissions that:
It is pleaded in the amended points of claim that the parties contemplated marriage at the time of this transaction, so if it was within the parties’ contemplation that they would marry, having regard to all those circumstances, how could it be said that there was no – there could be no reasonable likelihood of establishing that there was an order anticipated at that point in time that would be affected by this transaction, that is to say, the transfer of the 24 shares.

Claim in respect to the former matrimonial home

The Applicant’s claim in respect to the property at C Street, Suburb D NSW, being the former matrimonial home of the Applicant and the First Respondent (“the former matrimonial home”) were summarised at paragraph 48 of the wife’s Case Outline document, as follows:
The [Applicant] has proposed that the Second Respondent's share of the [former matrimonial] home be transferred to her as part of her properly settlement. This is on the basis that the Second Respondent receives fair market value by the [First Respondent] directing part of the lump sum the [Applicant] seeks he pays her by way of property adjustment, to the Second Respondent. The [Applicant] has pleaded this case under Part VIIIAA of the Family Law Act 1975.
At paragraph 49 of her Case Outline document, the Applicant observes that she does not perceive there to be a specific challenge to that part of her application. That assumption appears to be confirmed at paragraph 38 of the Second Respondent’s Outline of Submissions document, which states:
The Second Respondent does not oppose receiving the market value of his 50 per cent interest in the former matrimonial home and need not be joined to these proceedings in order for that to occur.
The Second Respondent notes that it is unnecessary for him to be joined to the proceedings for the purpose of orders being made in terms of those sought by the Applicant in respect to the former matrimonial home. As will be discussed, I accept that to be the case.

Consideration

Deficiency of pleadings

In setting out relevant legal principles applicable to the Court’s consideration of the summary dismissal and strike out applications, Senior Counsel for the Second Respondent referred to s 118 of the Act. However, that section was repealed by clause 24 of Part 1 of Schedule 1 of the Family Law Amendment (Family Violence and Other Measures) Act 2018, which received Royal Assent on 31 August 2018. In its place, that legislation inserted a new provision, being s 45A (2) of the Act, which relevantly provides:
Summary decrees
No reasonable prospect of successfully defending proceedings
(1) The court may make a decree for one 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 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.
Proceedings that are frivolous, vexatious or an abuse of process
(4) The court may dismiss all or part of proceedings at any stage if it is satisfied that the proceedings or part is frivolous, vexatious or an abuse of process.
(5) To avoid doubt, proceedings or a part of proceedings are not frivolous, vexatious or an abuse or process merely because an application relating to the proceedings or the part is made and later withdrawn.
Costs
(6) If the court makes a decree, or dismisses all or part of proceedings, under this section, the court may make such order as to costs as the court considers just.
Action by court on its own initiative or on application
(7) The court may take action under this section on its own initiative or on application by a party to the proceedings.
This section does not limit other powers
(8) This section does not limit any powers that the court has apart from this section.
That section does not appear to significantly change the Court’s existing powers, but rather, strengthens and codifies the Court’s power to dismiss unmeritorious cases and proceedings that are frivolous, vexatious or an abuse of process.
Further, Part XIB of the Act grants the Court powers in respect to vexatious proceedings. In that respect, s 102QA of the Act provides that:
Powers of a court not affected
This Part does not limit or otherwise affect any powers that a court has apart from this Part to deal with vexatious proceedings.
Note: For example, subsection 45A(4) allows a court to dismiss proceedings if it is satisfied that they are vexatious.
Section 102Q defines “vexatious proceedings” as including:
(a) proceedings that are an abuse of the process of a court or tribunal; and
(b) proceedings instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; and
(c) proceedings instituted or pursued in a court or tribunal without reasonable ground; and
(d) proceedings conducted in a court or tribunal in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose.
As noted by Senior Counsel for the Second Respondent, a matter is "frivolous" when it is without substance, is groundless or fanciful, and a matter is “vexatious” when it lacks bona fides, is hopeless and tends to cause the opposing party unnecessary anxiety, trouble and expense: Ritchie's Uniform Civil Procedure NSW (2018) at [4.15.10]-[4.15.15].
The Second Respondent argues that the Amended Points of Claim document filed by the Applicant fails to disclose a “reasonable cause of action”, thus engaging the power of summary dismissal under rule 10.12 of the Family Law Rules 2004 (“the Rules”). That provision relevantly provides:
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a) the court has no jurisdiction;
(b) the other party has no legal capacity to apply for the orders sought;
(c) it is frivolous, vexatious or an abuse of process; or
(d) there is no reasonable likelihood of success.
A matter need not be “hopeless” or “bound to fail” in order for it to have no “reasonable likelihood of success” within the meaning of rule 10.12(d): Bahar v Sohrab [2017] FamCA 792 at [49] to [51]. This principle now appears to be reflected in s 45A(3) of the Act.
Further, Senior Counsel for the Second Respondent referred to Walton & Gardiner (1993) 177 CLR 378 at 393, where their Honours stated that “proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail”. Reference was further made to Spellson v George (1992) 26 NSWLR 666 at 678, where Young AJA stated:
Particularly when court lists are so over-crowded with serious disputes between citizens or between citizens and government awaiting trial, the court must be vigilant to see that those cases are not unduly delayed by cases which have no reasonable chance of success clogging the lists. Accordingly there is almost a duty on the trial courts to strike out proceedings as an abuse of process which are doomed to failure. However, it is a very serious matter to deny to a litigant the right to have his or her case heard at a trial, so that extreme care must be used when deciding to make use of the power …
Senior Counsel for the Second Respondent submitted that, in the absence of a specific rule in the Rules, the High Court Rules 2004 apply mutatis mutandis so far as they are capable of application in proceedings in this Court. In that regard, rule 27.09.5 of the High Court Rules 2004 provides:
Where a pleading:
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceedings; or
(d) is otherwise an abuse of the process of the Court;
the Court or a Justice may order the whole or part of the pleading be struck out or amended.
Although there is no reference to proceedings being “scandalous,” s 45A(4) of the Act appears to reflect rule 27.09.5 of the High Court Rules.
In Westpac Banking Corporation v Michael Vincent Bourke & Anor [2012] NSWSC 111 at [22] to [24], Einstein J usefully summarised the relevant legal principles in respect to embarrassing pleadings, as follows:
… A pleading is embarrassing if it is unintelligible, ambiguous, or so imprecise in its identification of material factual allegations as to deprive the opposing party of proper notice of the real substance of the claim or defence: Gunns Ltd v Marr [2005] VSC 251 at [14]-15]; or if it pleads confusing or irrelevant allegations: Shelton v National Roads & Motorists Association Ltd (2004) 51 ACSR 278 at [18]. No attempt is made in the defendants' draft pleadings to link the vague factual matters asserted to any proper defence, or to respond to the matters alleged by the plaintiff.
In Northam v Favelle Favco Holdings Pty Ltd, (unreported, 7 March 1995), Bryson J said at 2 - 3:
A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to, or if imprecise or slang words are used with unduly broad ranges of possible meanings or without clear meanings. What is referred to must be clearly stated showing, as appropriate, when and where an event happened, who participated, what was said, what was the relevant effect of any document and so forth. It is not fair to require a defendant to flesh out general expressions or indirect allusions by piecing together information in other documents such as affidavits or experts' reports. He might get it wrong, and the greater the complexities are, the more probable it is that he will understand what is alleged in some different way to what the plaintiffs will rely on. Procedural justice can be upset just as much by opportunistic advocacy exploiting a choice among several possibilities as by an ambush from complete concealment. In the world of practicalities a defendant is unlikely to receive much protection when evidence is tendered which is an available meaning of a pleading if he has not attacked the pleading at an interlocutory stage.
This passage has been applied a number of times: see National Australia Bank v Menere [2010] NSWSC 381 at [64]-[65] per Davies J; Wen Guo Jin v L Bank Limited [2011] NSWSC 183 per McCallum J; McGuirk v University of New South Wales [2009] NSWSC 1424 per Johnson J.
However, as McCallum J appropriately noted in Seidler v Carroll & O’Dea [2013] NSWSC 338 at [8]:
Access to justice is a fundamental aspect of the administration of justice. The court should be vigilant to guard against the rigid application of principle at the expense of facilitating the just resolution of matters properly brought forward for judicial determination.
That caution is particularly relevant in family law proceedings. In that respect, while it was not said in the context of advocating for a cautious approach, I respectfully agree with and adopt the submission of Senior Counsel for the Second Respondent as to the purpose of pleadings in family law cases:
It is often said that the Family Court is not a Court of pleading. However, there are appropriate cases, such as the present proceedings in which allegations are made against third parties to the marriage, where the Court will order that the proceedings be conducted by some form of pleading. The purpose of the Family Court in ordering that a party file a pleading is the same as it is in other jurisdictions, that is to ensure the basic requirement of procedural fairness that a party should have the opportunity to be properly appraised of the case against them: see for example McGuirk v University of New South Wales (2009] at [21] [29].

The first question to address, in determining whether the pleadings in this matter are embarrassing, is essentially whether the Applicant’s Amended Points of Claim achieves the purpose of properly appraising the First and Second Respondents of the nature of the claims she makes against them.
The Applicant’s initial reluctance to provide an appropriately detailed Points of Claim document was regrettable. The Applicant’s original Points of Claim document was, in my view, deficient in that no real attempt was made “to link the vague factual matters asserted to any proper [cause of action]”. However, that same criticism which was made of the Applicant’s initial Points of Claim document cannot be made against its amended version, which is far more comprehensive.
As noted, the Applicant’s Amended Points of Claim is Annexure “A” to this decision. There are aspects of that document which could be improved. Specifically, there are areas where contentions could be more comprehensively particularised. The contention set out in paragraph 28(e) of the document, which states: “The transfer of the 24 shares was for the purpose of disguising the true owner as aforesaid”, as noted in the Outline of Submissions provided by Senior Counsel for the Second Respondent, is one example.
However, while there are some deficiencies, it cannot be said that the Amended Points of Claim document is unintelligible, ambiguous or imprecise in terms of the principles adumbrated by Einstein J in Westpac Banking Corporation v Michael Vincent Bourke & Anor (supra).
Finally, I note and agree with the contention by Senior Counsel for the Second Respondent that there are areas of inconsistency between the Applicant’s Amended Points of Claim and the orders sought in her Amended Initiating Application. However, this matter has not as yet been listed for a First Day Less Adversarial Trial and, therefore, the Applicant is entitled to amend her application without leave of the Court to address those areas of inconsistency: rule 11.10(1)(b)(i) of the Rules.
Accordingly, I am not satisfied that the Applicant’s pleadings should be struck out on the basis of being embarrassing, in terms of the authorities to which I have earlier referred.

Allegations of a constructive or resulting trust – whether no reasonable prospects of success

An application for summary dismissal is to be approached in accordance with the principles stated in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125. In that case, at 130, Barwick CJ explained that:
… great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.
In State of New South Wales v Spearpoint [2009] NSWCA 233 at 25 to 26, Allsop ACJ stated:
Whilst of course we must assess the present procedural rights by reference to the presently pleaded case, it is appropriate to judge the exercise of the power to dismiss the claim with an eye to the possible development of the case through the pleadings and the evidence.
It is often, though not always, inappropriate to dismiss summarily a claim such as this on the pleadings, at least as they stand at an early stage in litigation. Whilst the applicant has put forward arguments that have some force, those arguments assume an inability of the respondents’ case at trial to elicit facts reasonably connected with the current pleadings that could substantiate the claim as a matter of law. I cannot see that with the clarity required in a summary application.
To similar effect, the High Court has held that, in order to be entitled to summary judgment, there must be “a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”: Agar v Hyde (2000) 201 CLR 552 at [57]; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at [46]. This test is based on the principle that:
Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes: Agar v Hyde at [57].
I have earlier referred to the respective arguments of the parties concerning whether the Amended Points of Claim adequately particularise contentions of law and fact such that, at final hearing, it will be determined that there is a constructive or resulting trust in favour of the First Respondent in respect to all of the shares in BPL and GPL or the 24 shares that were transferred by the First Respondent to the Second Respondent on 21 October 1998.
While I am of the view that, at final hearing, the wife will face significant challenges in succeeding with her case, to use the words of Allsop P (as he then was), at this stage of the litigation, “I cannot see that with the clarity required in a summary application.”
Accordingly, I will not strike out those relevant parts of the wife’s Amended Points of Claim in which she contends that the First Respondent has a proprietary interest in BPL and GPL by way of a constructive or resulting trust in his favour.

Section 106B claim – whether no reasonable prospects of success

Senior Counsel for the Applicant acknowledged that his client faces a challenge in establishing that the transaction, which occurred on 21 October 1998, whereby the First Respondent transferred his interest in BPL to the Second Respondent, should be set aside pursuant to s 106B of the Act.
I agree with that assessment. The events referred to by the Applicant occurred almost two decades ago. All parties acknowledged that the literal words of s 106B of the Act must be applied within appropriate parameters. Most relevantly, there must sensibly be an historical cut-off date beyond which it is unreasonable to contend that a transaction was entered into by a party with the likely effect of defeating an existing or anticipated order in proceedings under the Act. It was also acknowledged that there must be an aspect of the conduct, on the part of the party who entered into the transaction, that requires, or at least justifies, the Court taking the significant step of setting aside the impugned transaction.
At the risk of over-simplistically representing the Applicant’s claim, it is my understanding that she argues that approximately seven months before she and the First Respondent married, and in circumstances where they were living in what was an occasionally tumultuous de facto relationship, the First Respondent engaged in a deliberate course of action to put his assets beyond the reach of the Applicant (his then de facto partner). This occurred in circumstances where the parties contemplated marriage and, therefore, the prospect of marital breakdown and associated conflict relating to the distribution of marital assets.
The Second Respondent contends that a transaction that occurred approximately two decades ago is beyond a reasonable temporal boundary, in terms of the application of s 106B of the Act. It was further contended that s 106B should not be applied, in circumstances where the relevant transaction was entered into at a time when the Applicant and the First Respondent were not married and, indeed, when the Applicant had no right to pursue orders for an adjustment of property under the Act.
As stated, Senior Counsel for the Second Respondent referred to my decision in Riemann & Riemann (No. 3) (supra) at [52], where I found:
The wife contends that the husband's anticipation of the order is established by the fact that, prior to September 2013, he had sought family law advice and, further, in April 2012 he discussed the possibility of marital breakup with a therapist. Even if it is accepted that, at final hearing, the applicant establishes those matters, at its highest, that evidence establishes only the anticipation of a claim under the Family Law Act. It does not establish anticipation of an order.
In that regard, it was submitted by Senior Counsel for the Second Respondent that:
Importantly in the context of this application, for s 106B to operate the order must have been objectively anticipated at the time of the transaction, that is when the shares were transferred on 21 October 1998. Moreover, the orders, as opposed to some claim by the Applicant, must also have been anticipated at the time of the transaction.
It is to be noted that the Applicant does not assert that the transaction entered into on 21 October 1998 was entered into with the intention “to defeat an existing or anticipated order in those proceedings”, but rather, that the transaction was “likely to defeat any such order”. That is, an order anticipated in these proceedings.
The first difficulty for the Applicant is that she has not set out a contention of fact that identifies the asserted value of the First Respondent’s shares in BPL at the time of the transaction and hence, the basis upon which she contends the transaction is likely to have the effect of defeating an anticipated order of the court in these proceedings.
The second difficulty for the wife is to establish how the operation of s 106B of the Act extends to a transaction took place some 16 years before the parties separated and some 18 years before proceedings were commenced in this Court. This is in circumstances where, at the date of the transaction, the parties were in a de facto relationship and, at that time, the Act did not apply to property disputes between people who were in a de facto relationship.
The determination of the issue which I have described as the second challenge for the wife essentially involves a legal argument as to the scope of s 106B and, in particular, the appropriate temporal and relationship boundaries that should reasonably be applied in considering whether s 106B has relevance to the transaction. It is my view that, at final hearing, it is unlikely that it will be determined that s 106B applies to such a situation. However, it would be unsafe to make that determination on the basis of the limited argument and material presented in these proceedings.
In that context, I appreciate that the argument has some significance insofar as the determination of what are the appropriate temporal and relationship boundaries of s 106B. A finding in that regard has the potential to impact upon other cases where it is argued, as in this case, that business structures were deliberately altered in contemplation of marriage to remove property from the potential reach of a party to the marriage in the event that the marriage fails and a dispute arises in respect to the distribution of marital assets.
Dismissing that aspect of the Applicant’s claim at this stage of the proceedings would deprive her of the ability to present her best evidence and arguments in respect to that question at final hearing. The Applicant would be unable to pursue the usual interlocutory processes to obtain more comprehensive evidence to support her contentions. It would also deprive her of the opportunity of a possible right of appeal in respect to an issue which is not without broader public significance.
Accordingly, I will not make an order for the summary dismissal of the Applicant’s claim pursuant to s 106B of the Act.

Claim in relation to the former matrimonial home

As previously noted, the Applicant has sought that orders be made for the Second Respondent to transfer his 50 per cent interest in the former matrimonial home to her. Senior Counsel for the Second Respondent submitted that his client does not oppose receiving the market value of his 50 per cent interest in the former matrimonial home and need not be joined to these proceedings in order for that to occur.
I accept that it is unnecessary for the Second Respondent to be joined to these proceedings for the purpose of the Applicant pursuing the orders she seeks in respect to the former matrimonial home. However, in circumstances where I have rejected the summary dismissal and strike out applications, it remains the case that the Second Respondent will be a party to the proceedings.

Orders

I have recorded my observation of difficulties that I anticipate the Applicant confronting in successfully pursuing the allegations of constructive or resulting trust and also her application to set aside the transaction of 21 October 1998. However, those difficulties are not such that I can, in these interim proceedings, with sufficient confidence, determine that the claims have no reasonable prospects of success. As a related issue, I do not determine that the proceedings are frivolous or vexatious.
Further, while there are areas where the contentions of fact and law set out in the Amended Points of Claim could be improved and the Applicant should amend her substantive application such that it accords with the relief she is seeking in the Amended Points of Claim, I am satisfied that the pleadings are adequate to properly inform the First and Second Respondents of the nature of the case against them. I, therefore, do not strikeout the pleadings as being embarrassing, based on the authorities to which I have earlier referred.
Accordingly, I dismiss the application of the Second Respondent.

I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 2 November 2018.

Associate:

Date: 2 November 2018

“A”

IN THE FAMILY COURT OF AUSTRALIA SYC 8389/2016

BETWEEN

MS HAWKING

Applicant

And

MR H HAWKING

First Respondent

And

MR HAWKING

Second Respondent

APPLICANT’S AMENDED POINTS OF CLAIM

Relief sought and sources of jurisdiction and power

Declaration that the First Respondent is the beneficial owner of all of the ordinary shares in B Pty Ltd ACN … (“BPL”).
Further or in the alternative declaration that the First Respondent is the beneficial owner of 24 ordinary shares in BPL (“the 24 shares”).
Further or in the alternative declaration that the Second Respondent holds the 24 shares on trust for the First Respondent.
Orders by way of property adjustment in the form of a lump sum payment in favour of the Applicant payable by the First Respondent, calculated with reference to the value of shares in BPL to the First Respondent as found by the court, more particularly described in the Further Amended Initiating Application filed 30 January 2018.
Particulars of jurisdiction and source of power for items 1 - 3
a.Section 79 of the Family Law Act 1975
b.Section 78 of the Family Law Act 1975
c.In the alternative the accrued or pendent jurisdiction of the Family Court to exercise the inherent jurisdiction of the Supreme Court of NSW to make declarations of trust in respect of property:
i.A third party to the marriage claims a beneficial interest in property;
ii.The resolution of this controversy is an integral part of the resolution of the section 79 proceedings;
iii.The controversies share a common sub-stratum of facts
Further or in the alternative that the transfer of 24 shares in BPL by the First Respondent to the Second Respondent dated 21 October 1998 be set aside.
Particulars of jurisdiction and source of power for item 5
a.Section 106B of the Family Law Act 1975
That the 50% interest of the Second Respondent in the property situated at C Street, Suburb D NSW having folio identifier … (‘the former matrimonial home’) shall be transferred to the Applicant for fair market value, payable to the Second Respondent from the Applicant’s entitlements to a lump sum property adjustment order against the First Respondent, such relief more particularly described at paragraph 6 of Final Orders sought in the Further Amended Initiating Application filed 30 January 2018.
Particulars of jurisdiction and source of power for item 6
a.Section 78(2) as to sale or partition of property jointly owned by the parties including the Second Respondent;
b.Section 79 of the Family Law Act 1975; and
c.Section 90AE(2) of the Family Law Act 1975
That the Applicant shall have exclusive occupation of the former matrimonial home pending its transfer (or on the First Respondent’s application, its sale) and that none of the parties shall further encumber the former matrimonial home without the written consent of the other parties.
Particulars of jurisdiction and source of power for item 7
a.Section 114 of the Family Law Act 1975; and
b.Section 90AF(2) of the Family Law Act 1975

Background Facts

The Applicant, Ms Hawking and the First Respondent, Mr H Hawking are the spouse parties in these proceedings.
The Second Respondent, Mr Hawking is the father of the Husband.

10.The Applicant and First Respondent commenced cohabitation in 1992. At the commencement of cohabitation:
a.the Applicant was working full time as a [health professional]; and
b.the First Respondent was a full time employee, working as a [tradesman].

11.The Applicant and First Respondent have three children as follows:
a.[Mr X] born … 1994;
b.[Ms Y] born … 1996; and
c.[Z] born … 2001.

12.In mid-1997 an Interim Apprehended Violence Order was taken out against the First Respondent for the Applicant’s protection. At this time the Applicant and First Respondent separated for a period of several months, and lived separately and apart during this period (“the first separation”).
13.The First Respondent and Applicant recommenced co-habitation in approximately late-1997.
14.The First Respondent and the Applicant were engaged to be married in … 1999.
15.The First Respondent and Applicant were married … 1999.
16.The First Respondent and Applicant separated on a final basis on 26 October 2014 (“the final separation”).

Relevant facts and contentions of law in support of relief sought in relation to the shareholding in [BPL]

17.The husband was the beneficial owner of 24 ordinary shares in [BPL] when he acquired them.

a.In mid-1994 the First Respondent purchased [equipment]. The First Respondent worked full time for himself as a [tradesman] for hire and profit.

b.On 9 February 1996 the company [B Pty Ltd] (“[BPL]”) was registered.

c.On 12 February 1996 the First Respondent signed and caused to be lodged with the Australian Securities Commission notification that he was appointed as the sole director and secretary of [BPL].

d.There are 100 issued and paid $1 ordinary shares in [BPL].

e.On 12 February 1996 the First Respondent as director of [BPL] signed and caused to be lodged with the Australian Securities Commission notification as to the following allotment of those 100 ordinary shares:

i.24 shares to the First Respondent;
ii.24 shares to the First Respondent’s sister Ms F Hawking; and
iii.52 to an accountant Mr E.

f.At all material times from no later than 12 February 1996 to the present date. BPL has been in the business of [providing services].
g.[BPL] acquired or acquired the use of the First Respondent’s equipment and hired the equipment for profit from no later than 12 February 1996.

h.At all material times since no later than 12 February 1996 to the present date the First Respondent has engaged in the business of [providing service] for profit full time through BPL.
i.On 12 February 1996 [Mr E] signed a letter to the Secretary of [BPL], being the First Respondent, confirming that he held 52 ordinary shares in BPL on trust for the Second Respondent, and this letter confirmed that the Second Respondent was the beneficial owner of these 52 shares. No other letters or documents relating to the beneficial ownership of the shares in BPL were signed at this time.

j.On 21 October 1998 Mr E executed a transfer of the 52 ordinary shares he held on trust in [BPL] to the Second Respondent, for which transfer no monetary consideration was paid to Mr E.

k.On 21 October 1998 [Ms F Hawking] signed a letter to the Secretary of [BPL], being the Second Respondent, confirming that she held 24 ordinary shares in [BPL] on trust for the Second Respondent, and this letter confirmed that the Second Respondent was the beneficial owner of these 24 shares. No other letters or documents relating to the beneficial ownership of the shares in [BPL] were signed at this time.
l.At no time did the First Respondent sign any letter or documentation stating that he held shares in [BPL] on trust for the Second Respondent. There is no written record of the First Respondent holding any shares or interest in [BPL] on trust for the Second Respondent.

18.There has never been any valid disclaimer or relinquishment of the First Respondent’s beneficial interest in the 24 shares by the First Respondent.
a.The First Respondent made no disclaimer of his beneficial interest in the 24 shares nor did he relinquish his beneficial interest in them at any time and in particular in the period 12 February 1996 to 21 October 1998.

19.During the period mid-1997 until 21 October 1998, the First and Second Respondent determined to change the officeholders of [BPL] and the share register of [BPL] so that the First Respondent was not recorded as the director or secretary of [BPL] and the First Respondent was not recorded as a shareholder of [BPL].
a.On 20 February 1998 the Second Respondent was appointed as the sole director and secretary of [BPL] and the First Respondent removed from these positions at this time.
b.On 21 October 1998 the First Respondent executed a transfer of the 24 shares to the Second Respondent, for which transfer $24 is recorded as consideration.

20.The First Respondent and the Second Respondent did not inform the Applicant at any time of the actions referred to in paragraph 19.

21.At all material times from 12 February 1996 until the present date the First Respondent has been the beneficial owner of the 24 shares.
22.In 2002 the company [G] Pty Ltd (“[GPL]”) was registered. The Second Respondent was registered as the sole director of [GPL] at the time of registration. There are 794,033 issued shares in [GPL]; one share is owned by the Second Respondent and the remainder are owned by [BPL], and this has been the position since the company was registered.
23.At all material times from 20 February 1998 to the present date the First Respondent has been a director of [BPL] and [GPL] as defined by the Corporations Act 2001 without a valid appointment to that office in that:
a.The First Respondent acted in the position of a director; and/or
b.The Second Respondent was accustomed to act in accordance with the First Respondent’s wishes and instructions.

24.[BPL] including its subsidiary [GPL] is the alter ego of the First Respondent by reason of the First Respondent’s practical control of the said companies including dealing with its assets and profits:
25.The following particulars of the claims at paragraphs 21-24 are relied upon:
a.From 21 October 1998 the First Respondent has continued to direct and conduct the affairs of [BPL] and from 2002, its subsidiary [GPL].
b.At all material times during the de facto relationship and the marriage of the spouse parties and on many occasions the First Respondent referred to [BPL] as “our company” (with reference to the spouse parties) and “my company” in the presence and hearing of the Applicant.

c.At no time during the de facto relationship and the marriage of the spouse parties did the First Respondent refer to [BPL] as the Second Respondent’s company to the Applicant.

d.At no time during the de facto relationship and the marriage of the spouse parties did the First Respondent claim to the Applicant that he had no interest in [BPL].

e.From 21 October 1998, and in the case of its subsidiary company from 2002, until the present date the First Respondent has received benefits from [BPL] and [GPL] at his direction and discretion including but not limited to:
i.The use and enjoyment of assets of the companies;
ii.Financial benefits in the form of personal expenses and liabilities paid by the companies on his behalf;
iii.Financial benefits in the form of assets acquired on his behalf and for his personal use and enjoyment either by the companies directly or by the companies advancing money to the First Respondent for this purpose;
iv.Financial benefits in the form of dividends allocated to the Second Respondent but drawn from the bank and credit card accounts of the companies by the First Respondent and used by the First Respondent at his will; and
v.Financial benefits in the form of loans made to the First Respondent by the companies at his will.

f.In 2002 the First Respondent commissioned the building of a … Yacht.

g.[GPL] purchased the …Yacht at the direction of the First Respondent, funded by [BPL].

h.The … Yacht was moored and stored as follows:

i.Initially the ...Yacht was moored at …; and
ii.The ...Yacht was then moored at the property lived in by the First Respondent and Applicant at [Suburb J], after the parties moved into this property in 2006.

i.After its purchase the ...Yacht was primarily used by the First Respondent for his own personal enjoyment.
j.In approximately 2010 the ...Yacht owned by [GPL] was sold by [GPL] at the direction of the First Respondent.

k.In February 2010 the First Respondent and Applicant flew to the United States of America to purchase a 55 foot ...boat (“...boat”) for approximately $780,000. This trip was funded by [BPL] at the direction of the First Respondent, and the Second Respondent did not go on this trip. The ...boat was purchased by [GPL] at the direction of the First Respondent as an asset of [GPL]. The First Respondent was registered as the owner of the ...boat with NSW Roads and Maritime Services. The ...boat was chartered to be delivered to Australia, paid for by [BPL] at the direction of the First Respondent.

l.The ...boat has been moored and stored as follows:

i.Initially the ...boat was moored at the property lived in by the First Respondent and Applicant at Suburb J;
ii.The ...boat was then moored at … for a brief period;
iii.From 2013, when the First Respondent and Applicant moved into the former matrimonial home, the ...boat was moored at the …, which is located approximately 300 metres from the former matrimonial home; and
iv.When the First Respondent moved to Queensland after the final separation the ...boat was moved to Queensland where it has predominately remained.

m.After its purchase the ...boat was primarily used by the First Respondent for his own personal enjoyment.
n.By way of further particulars from 2006 the First Respondent and the Applicant were receiving regular financial benefits from [BPL] including the following, and this is in addition to the wages paid to the First Respondent, all made at the direction of the First Respondent

i.$1,000 per week in cash paid to the Applicant;
ii.All mortgage repayments on their home;
iii.Payment of utilities and rates;
iv.Mobile phones and mobile phone expenses for both the First Respondent the Applicant and for their older children; and
v.Motor vehicle expenses, including the provision of motor vehicles for their own personal use to both the First Respondent and Applicant.

o.In 2009 the Second Respondent changed his place of residence from Sydney to the NSW Central Coast.

p.By way of further particulars from 2009 the financial benefits from [BPL] received by the First Respondent and Applicant included the following, in addition to their wages and cash payments, and all made at the direction of the First Respondent:
i.All mortgage repayments on their home;
ii.Payment of utilities and rates;
iii.Mobile phones and mobile phone expenses for both the First Respondent the Applicant and for their children;
iv.Motor vehicle expenses, including the provision of motor vehicles for their own personal use to both the First Respondent and Applicant;
v.Payment of groceries;
vi.The provisions of boats and payment of associated expenses;
vii.Payment of holidays for them and their children, including flights, accommodation and transport.

q.During the relationship of the spouse parties [BPL] at the direction of the First Respondent purchased personal property for the First Respondent and Applicant’s personal use including:

i.A caravan at …, with an estimated purchase price of approximately $3,000;
ii.Two ski boats, each with an estimated purchase price of approximately $16,000;
iii.A 21 foot [boat], with an estimated purchase price of approximately $25,000;
iv.A [second] boat;
v.A new [third] boat, with an estimated purchase price of $50,000;
vi.Several new … motorbikes, each with an estimated purchase price in the range of $2,000 to $4,000;
vii.A new [motorbike];
viii.A new [4WD], purchased off the showroom floor;
ix.Two new [4WDs], purchased off the showroom floor; and
x.A new [prestige] motor vehicle.

r.By way of further particulars the First respondent has continued to receive benefits from [BPL] at his direction since the separation of the spouse parties including but not limited to:
i.Rental payments to accommodate himself and his wife at $1,200 per week;
ii.Regular weekly payments over and above his salary from [BPL];
iii.Regular contributions to personal expenses incurred on the First Respondent’s credit card;
iv.All mortgage repayments on the former matrimonial home;
v.Payment of utilities and rates;
vi.Child support payments for the minor child of the spouse parties
vii.Mobile phone expenses for the First Respondent and for the children of the spouse parties;
viii.Motor vehicle expenses, including the provision of motor vehicles for his own personal use; and
ix.The provision of a boat and payment of associated expenses;

s.Further particularisation of the benefits received by the spouse parties and the direction of the companies by the First Respondent may be provided upon completion of the discovery process.

26.The transfer of the 24 shares to the Second Respondent and the removal of the First Respondent from office as director in [BPL] was a device of the First and Second Respondents intended to disguise the First Respondent’s beneficial ownership of the ordinary shares in [BPL] (or in the alternative the 24 shares) and his role as director from any Court called upon to determine any financial claim arising from the de facto relationship and future marriage of the First Respondent with Applicant), and to protect the said beneficial interest from any such claim.
a.In approximately 1996 the Second Respondent separated from his de facto partner [Ms K]. The Second Respondent went through a property settlement with [Ms K] and [Ms K] received a large amount of property transferred into her sole name as a result of this settlement. At this time the First Respondent said to the Applicant words to the effect of “I am never going to let that happen to me (referring to the property settlement)”. The First Respondent has repeated words to this effect on numerous occasions in the years after the Second Respondent and [Ms K] separated.

27.By reason of the foregoing the Applicant seeks a declaration that the First Respondent is the beneficial owner of all of the ordinary shares in [BPL] or in the alternative the 24 shares.
28.Further and in the alternative the Second Respondent holds the 24 shares on resulting trust for the First Respondent:
a.The Applicant relies on the matters pleaded above
b.The transfer of 24 shares was made for no or only nominal consideration from the First Respondent to the Second Respondent;
c.The presumption of a resulting trust arises;
d.The transfer of 24 shares to the Second Respondent was made with no intention on the part of the First and Second Respondents to transfer a beneficial interest in the 24 shares to the Second Respondent;

e.The transfer of the 24 shares was for the purpose of disguising the true owner as aforesaid.

29.Further and in the alternative the Second Respondent holds the 24 shares on constructive trust for the First Respondent:
a.The Applicant relies on the matters pleaded above;
b.The transfer of 24 shares was accepted by the Second Respondent with actual notice of the prior beneficial interest of the First Respondent and was taken by him subject to that beneficial interest; and

c.The Second Respondent would be unjustly enriched were he permitted to rely upon the transfer as if it conferred upon him a beneficial interest in the 24 shares.

Relevant facts and contentions of law as to section 106B proceedings

30.There are existing, pending proceedings under the Family Law Act 1975.
a.Those brought by the Applicant for a property adjustment order under section 79.

31.Before 21 October 1998 the First Respondent had an interest in [BPL]:
a.As the legal and beneficial owner of the 24 shares, as pleaded above.

32.There was a disposition of an interest by an instrument.
a.The transfer of the 24 shares dated 21 October 1998.

33.The instrument and disposition was made by the First Respondent.
34.At all material times including the time the instrument or disposition was made the First Respondent was aware that the Second Respondent and his de facto partner [Ms K] had been involved in a dispute as to property adjustment arising from their de facto relationship and its breakdown.
a.As particularised above.

35.At all material times including the time the instrument or disposition was made it was reasonable for the First Respondent to foresee that because of the first separation he and the Applicant might separate in future, and he did in fact foresee that possibility.
a.As particularised above.

36.At all material times up to and including the time the instrument or disposition was made the First Respondent and the Applicant contemplated the possibility they might marry one another.
37.The First Respondent and the Applicant did in fact at all such material times contemplate marriage to one another.
38.At all material times including the time the instrument or disposition was made it was objectively reasonably foreseeable by the First Respondent in all the circumstances of their de facto relationship including the two children born to it in 1994 & 1996 that if he separated from the Applicant the Applicant could and would make a claim for orders in future proceedings for property adjustment affecting his interest or having regard to his interest in the 24 shares (‘the anticipated orders’).
39.The anticipated orders it was objectively reasonable for the First Respondent to foresee included orders in future proceedings arising from the breakdown of the First Respondent’s contemplated marriage to the Applicant, such as the present proceedings.
40.The transfer of the 24 shares on 21 October 1998 was made to defeat the anticipated orders and the First Respondent made the instrument or disposition for that purpose.
41.In the alternative, the effect of the instrument or disposition is to defeat the claim for property adjustment made by the Applicant in her Further Amended Initiating Application filed 30 January 2018:
a.But for the transfer of the 24 shares to the Second Respondent on 21 October 1998, the 24 shares would be property of the parties or either of them for the purposes of section 79(1)(a) and subject to the power of the Court to make a property adjustment order under section 79.
b.By reason of her contributions of the kinds referred to in section 79(4)(a) – (c) and the other matters at section 79(4)(d) – (g) is it just and equitable to make an order under section 79 adjusting the interests of the parties in property, including the 24 shares.

i.To be particularised when directed as part of the Applicant’s evidence for trial

c.If the transfer of the 24 shares is not set aside, then the Court cannot make a property adjustment order with respect to them in favour of the Applicant and her claim is thus defeated.

Relevant facts and contentions of law as to relief sought in respect of the former matrimonial home

42.On 17 January 2013 the former matrimonial home was acquired by the parties.
43.The parties acquired the former matrimonial home as tenants in common in shares as follows:
a.25% to the Applicant
b.25% to the First Respondent
c.50% to the Second Respondent

44.The parties borrowed $1,148,000 from [L Bank] to fund part of the purchase price of the former matrimonial home and secured the loan by way of mortgage against the title to the former matrimonial home.
45.The Applicant has lived at the former matrimonial home since it was acquired.
46.The Second Respondent has never lived at the former matrimonial home.
47.The former matrimonial home was acquired in part with the net proceeds of sale of a previous matrimonial home at M Street, Suburb J, which had been owned by the three parties as joint tenants since September 2006.
48.The property at Suburb J had been partly acquired using net proceeds of sale of a property N Street, Suburb O which was the property of the spouse parties only, and the balance by way of mortgage loan borrowed by the three parties.
49.The Second Respondent never lived at the property at Suburb J.
50.The First Respondent represented to the Applicant that in the case of the property at Suburb J and the former matrimonial home the only reason the Second Respondent was on title was that he was required to be a joint borrower with them due to the amount borrowed in each case.
a.As particularised at paragraphs 58-64 of the Applicant’s affidavit filed 16 December 2016

51.The Applicant seeks orders that she become the sole owner of the former matrimonial home free of mortgage, and that this is achieved by directing the First Respondent to pay part of the lump sum property adjustment entitlement she seeks to pay the Second Respondent 50% of the net equity in the former matrimonial home and discharge the mortgage secured over the title to the former matrimonial home.
52.The relief sought:
a.Is reasonably appropriate and adapted to effect a division of property between the spouse parties, since the Applicant wishes to retain the property as part of and by using her entitlements under section 79 of the Family Law Act 1975 and the alternative is a sale of the property;
b.Is just and equitable as regards the Second Respondent since he would by the order be released from his obligations under the mortgage and receive fair market value for his 50% interest in the property, just as he would on a sale;

c.Has the same taxation effect upon the Second Respondent as a sale of the property would;

d.Has the same taxation effect upon the spouse parties as a sale of the property would, subject to any application for exemption from stamp duty under the Duties Act 1997 NSW) on the transfer from the Second Respondent to the Applicant;

e.Has no social security effect on the spouse parties;

f.Involves less administrative costs for the Second Respondent compared with the costs of a sale; and

g.Is within the economic and legal capacity of the Second Respondent to comply with the order.

53.The Applicant seeks orders under section 114 pending the transfer or (if the First Respondent’s relief is granted) sale of the former matrimonial home for exclusive occupation and to preserve it from further financial encumbrance without her consent:
a.The Applicant has had exclusive occupation of the former matrimonial home (as against the Respondents) by agreement since the final separation and there is no basis to change this;

b.It is proper that the equity in the former matrimonial home be preserved and not be eroded by further borrowings unless the parties consent;

c.The balance of convenience favours the making of the injunctions sought.