HELINSKI and BASSETT
[2022] FCWA 275
•16 DECEMBER 2022
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: HELINSKI and BASSETT [2022] FCWA 275
CORAM: COHEN J
HEARD: 13 DECEMBER 2022
DELIVERED : 16 DECEMBER 2022
FILE NO/S: 451 of 2019
BETWEEN: MR HELINSKI
Applicant
AND
MS BASSETT
Respondent
Catchwords:
PRACTICE AND PROCEDURE - Application to amend - wife seeks to introduce new cause of action for child support departure orders - case allocated to trial in three months' time - hearing of application delayed due to Court resource unavailability - substantial trial material already filed in both financial and parenting proceedings - Court satisfied parties will not be unduly prejudiced in dealing with the additional issue - leave to amend granted
PRACTICE AND PROCEDURE - Joinder of third parties - wife seeks leave to join minority shareholder who may be affected by enforcement of a proposed final springing order - husband and third party oppose joinder - valuation issue - joinder refused
Legislation:
Family Court Rules 2021 (WA)
Family Law Act 1975 (Cth)
Category: Reportable
Representation:
Counsel:
| Applicant | : | Mr A |
| Respondent | : | Mr E |
| Non-party | : | Mr F |
Solicitors:
| Applicant | : | Law Firm A |
| Respondent | : | Law Firm B |
| Non-party | : | Law Firm C |
Case(s) referred to in decision(s):
[2019] FCWA 167
Aon Risk Services Australian Ltd v Australian National University (2009) 239 CLR 175
B Pty Ltd and Ors & K and Anor (2008) 39 Fam LR 488
Gallo v Dawson (1990) 64 ALJR 458
Gould and Gould (1993) FLC 92-434
Lindon v Commonwealth (No 2) (1996) 70 ALJR 541
Lukies v S2V Consulting Pty Ltd (2018) 333 FLR 226
Southwell & Jane [2011] FamCA 663
Wayne v Dillon & Anor (2008) 40 Fam LR 543
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES' NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Helinski and Bassett has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
This copy of the Court's Reason for judgment may be subject to review to remedy minor typographical or grammatical errors (r 312(b) Family Court Rules 2021 (WA)), or to record a variation to the orders pursuant to r 311 Family Court Rules 2012 (WA).
Introduction
1The Court was called upon to determine various procedural and interim financial matters, which could not be agreed between the applicant, [Mr Helinski] ("the husband") and respondent, [Ms Bassett] ("the wife").
2I refer to the parties as wife and husband respectively, notwithstanding the fact that they are separated, but so as to avoid any confusion which might otherwise arise by identifying them as the applicant and respondent, particularly in the context of interim proceedings. I mean no disrespect to the parties by this reference and acknowledge that their relationship as husband and wife has concluded.
3To the parties' credit, many of the interim issues in dispute were resolved by consent prior to the interim hearing taking place. A summary of the interim issues that remain in dispute are as follows:
(a)the wife's application to further amend her Form 1A Response to introduce child support departure orders and also to join [Mr J] and [Ms J] as trustees for the [Trust D] to the proceedings ("the Trustees");
(b)the wife's application to issue subpoena to various third parties, who as the Court understands it, are clients of the husband. This application was ultimately not pressed on behalf of wife on the basis the parties would comply with their respective obligations to provide full and frank disclosure and where the parties had leave to issue subpoena by a certain date;
(c)disclosure, however, it transpired that neither party pressed any specific orders in respect to disclosure, notwithstanding it featured in written submissions filed on behalf of both parties. [Mr A] for the husband ("[Mr A]") remarked that the parties' issues with disclosure were more akin to a "whinge", as opposed to requesting the Court to make any positive orders in respect to the issue;
(d)who should be appointed to value the plant and equipment, in circumstances where the parties had agreed the briefing letter? This issue was ultimately agreed by consent based on who could commence their valuation sooner. This fact was determinative, as these proceedings are listed for trial to commence [in early] 2023 before his Honour, Justice O'Brien;
(e)how the briefing letter to the agreed remuneration expert should be drafted. In particular, whether the letter should direct the remuneration expert to consider a particular number of hours worked (or allegedly worked) by the husband, which was the wife's preferred position, or whether the remuneration expert should be asked to provide an opinion simply as to the level of appropriate remuneration for a [businessman],[1] which was the husband's position. I provided my view about this issue at the interim hearing so that the parties could get on with instructing the agreed remuneration expert and will not outline my decision in these reasons; and
(f)costs, which was ultimately not pressed by either party, as it was conceded that the parties' conduct, success of their respective applications, appropriateness of various positions adopted by them in respect to interim issues and offers are all relevant to the issue of costs, and that further submissions should be made to address these points after determination of substantive issues.
[1] See Husband’s Written Submissions filed 8 December 2022 [25].
4These are the reasons for decision following the interim hearing that took place on 13 December 2022. On that occasion, the husband was represented by Mr A ("[Counsel for the husband]"), the wife by [Mr E] ("[Counsel for the wife]") and the Trustees by [Mr F] ("[Counsel for the Trustees]").
5At the conclusion of the interim hearing, I reserved my decision in respect to the joinder and child support departure issues as I wanted a further opportunity to consider the oral submissions made on behalf of the parties and the Trustees.
Orders sought
6The husband seeks orders as set out in his Form 2 Application filed 3 June 2022 and as per paragraphs 4B, 5, 7, 8, 9(c), 10 and 11 of his amended minute of interim orders sought filed 29 August 2022.
7The wife seeks orders in terms of paragraphs 5, 12 and 13 of her Amended Form 2 Application filed on 25 July 2022. Pursuant to paragraph 5 of the orders sought by the wife in her Amended Form 2 Application, the wife seeks leave of the Court to file a Further Further Amended Form 1A Response in the manner set out in annexure A, including leave to join the Trustees. If the wife is successful in her application, the relevant final orders sought, insofar as they relate to the Trustees, are as follows:
Sale on Default
7.If the Husband defaults on his obligations regarding the Refinance or Payment above ("Default Clause"):
(a)In accordance with the Shareholders and Directors Agreement, the Husband cause to be offered for sale shares in [Company A] to [Trust D] and [Trust D] be at liberty to purchase the shares;
(b)If [Trust D] does not purchase the shares within the timeframe permitted by the Shareholders and Directors agreement, the Husband do all things and sign all documents to cause the sale of assets of the [Trust C] including its corporate interest in [Company A];
(c)Upon sale as set out in either subparagraph above, the Husband cause to be paid proceeds as received in the following priority:
(i)such amount as is required to discharge the [Town A] Mortgage;
(ii)to the Wife, Payment of any unpaid part thereof, together with interest at the rate prescribed by the Family Law Rules from the due date for the Payment; and
(iii)the balance then remaining be retained by the husband.
8.In the event that the interests of [Trust C] in [Company A] are sold to a party other than the Second or Third Respondents, then those Respondents do all things to register the transfer of [Trust C]'s shares to the person or entity who has acquired such shares.
(As per original)
8The Court was provided with a document entitled the Trust D's Minute of Proposed Orders for [Hearing], seeking orders as follows:
… until further order, THE COURT MAKES THE FOLLOWING ORDERS BY CONSENT:
1.The respondent wife's interim application for leave to join [Mr J] and [Ms J] as trustees of [Trust D] be dismissed.
2.The respondent wife ensure that in any further amended response to initiating application filed by the respondent wife:
a.neither [Mr J] as trustee for [Trust D] nor [Ms J] as trustee for [Trust D] are named as parties to the proceedings; and
b.neither Proposed Orders 7 and 8 nor any similar order are included in the respondent wife's proposed orders sought.
3.Costs be reserved.
(Tracked changes omitted)
Documents relied on
9The husband relied on the following documents:
(a)paragraphs 238 to 253 and 257 to 265 of his trial affidavit filed 18 June 2021;
(b)the husband's affidavit filed 3 June 2022, together with the certificate of conferral also filed on that date;
(c)the husband's affidavit filed 29 August 2022;
(d)the affidavits of [Mr K] and Mr J filed 9 November 2021;
(e)the affidavits of [Mr L] filed on 10 November 2021 and 29 August 2022;
(f)orders made 13 June 2022; and
(g)the affidavit of the Single Expert Witness, [Ms A] filed 3 August 2022.
10The wife relied on the following documents:
(a)her trial affidavit filed 30 June 2021;
(b)further affidavits filed by herself on 5 May and 25 July 2022; and
(c)the affidavits of Ms A filed 31 March 2022 and 3 August 2022.
11Both parties referred the Court only to specific paragraphs of the various affidavits, however, having regard to the complexity of this matter, I read the entirety of the material and not just the specific paragraphs referred to in written submissions.
12Both parties filed written submissions for the interim hearing, as did Counsel for the Trustees. I read all the written submissions filed, including any cases referred to in the body of the written submissions themselves.
13After the interim hearing had commenced, the Court was advised of a tender bundle which Counsel for the wife assumed was before the Court. However, as the tender bundle was uploaded to the e-Courts portal after the close of Registry at 4.00pm [the day before the hearing], the bundle was timestamped as effective from [the day of the hearing] at 9.00am (being the time the Registry re-opened).
14Regrettably, the tender bundle was not referred by the Registry and I was unaware of its existence until raised by Counsel for the wife. Irrespective, I observe the tender bundle is some 157 pages in length, and it is unlikely I would have had the opportunity to read the documents in any event even if I did not have another matter to deal with prior to calling on the interim hearing. As such, I intend to make an order uplifting the [tender bundle] from the Court file.
Brief background
15One need only review the Court file and have regard to the parties' evidence about their litigation expenses to ascertain the complexity of the proceedings, which have been actively litigated.
16The husband was born [in] 1979 and is 43 years old. The husband is [a businessman] [working for] the [Group A] of entities ("the Group"), which comprises several companies and trust structures, including but not limited to Company A and Trust C.
17The wife was born [in] 1978 and is 44 years old. The wife is [a doctor].
18The parties have two children, [Child A] (aged 10) and [Child B] (aged seven).
19On or around [October 2017], the Trustees acquired a 15% shareholding in Company A pursuant to a share sale agreement.[2] Aside from Mr J having filed three affidavits in support of the husband's case, neither of the Trustees have had any involvement in these proceedings. As will be seen later in these reasons, nor do they wish to do so.
[2] See Husband’s Trial Affidavit filed 18 June 2021 [257] - [265].
20The husband commenced proceedings on 15 January 2019. The wife filed her response on 12 February 2019. Since that time, both parties have filed amended applications and responses.
21Ms A was appointed Single Expert Witness in the financial proceedings. She has prepared two reports, which were filed on 31 March and 3 August 2022. Ms A has been instructed to file a further report, which the parties have advised the Court will be ready prior to the trial, which is scheduled to commence [in early] 2023 before the Honourable Justice O'Brien.
22[Dr A] was appointed Single Expert Witness in respect to the parenting proceedings. Dr A prepared a primary report that was filed on 7 July 2021. Dr A has been instructed to prepare an update, which the parties have again advised the Court will be ready prior to trial.
23In addition to the abovementioned update reports from the Single Expert Witnesses, [Valuer A] were appointed by consent to value plant and equipment of the Group. [Valuer B] have been instructed to provide updating valuations for real property relevant to issues before the Court, being the [Town B], Town A and [Town C] properties. [Financial Advisor A] have been instructed to calculate the husband's level of remuneration.
24At the interim hearing, I raised concern about whether the parties would in fact be ready for trial and I was assured they would be. Notwithstanding those assurances, I observe that much will depend on the timely completion of the various reports and valuations referred to in the preceding paragraph, which in many ways, is out of the parties' hands.
25Whilst I accept that Ms A is likely to be able to have her draft report prepared, in which she will need only "plug in" figures contained in the other valuations and reports, she is also in the hands of the other professionals undertaking valuations and reports. Importantly, the parties will still need an opportunity to consider all the professional reports identified in the preceding paragraph with enough time to ask questions of the experts, if necessary.
26Since proceedings commenced, the parties have had three parenting mediations with [Mediator A], a mediation style conference with [Mediator B] and a Conciliation Conference at the Family Court of Western Australia [in] 2020, without reaching an agreement in relation to either parenting or financial issues. More recently, they attended a conference with [Registrar A] [in mid] 2022 in which no agreement could be reached in respect to any issues.
27The proceedings were listed for an interim hearing [in] October 2022 to deal with the matters which ultimately came before the Court [at the current hearing]. [The October] hearing was administratively vacated by the Court on 15 September 2022 due to the non-availability of the [presiding Judge]. Regrettably, the Court relisted the proceedings to [November] 2022 without consultation with the parties' solicitors and their preferred counsel. Additionally, further programming issues arose, which were the subject of a letter from Chief Judge Sutherland to the parties' solicitors on 9 November 2022, which I will not expand on as the parties are familiar with the same.
28What is relevant for present purposes is that the wife filed her application seeking to amend the final relief sought by her, including to join the Trustees and have child support departure orders made on 25 July 2022. Through no fault of the parties, the Court could not deal with the wife's application until [the hearing before me]. Therefore, any argument or concern the husband, the Trustees and the Court may have about the application being brought on the "doorstep" of the trial must be considered, having regard to the Court's involvement in the delay. For the avoidance of doubt, any criticism levelled at Counsel for the wife for the delay, noting his unavailability on [the November date] is, in my view, unfairly made. I do not shy away from the fact that the Court should have contacted the parties' solicitors and/or counsel to enquire as to their availability on that day, which did not happen.
29As I have already noted, the proceedings are listed for a 5-day trial in respect to both financial and children related matters, which is listed to commence [in early] 2023.
The wife's position
30The wife's position in respect to the joinder of the Trustees is as follows:
•had the application been brought earlier, the wife would not have been required to seek leave of the Court to amend her response to seek an order joining the Trustees to the proceedings. The only reason she is required to do so is because of the stage of the proceedings;
•it is not unusual for a party to seek a springing order at trial of the kind the wife is seeking. Counsel for the wife argued that it would be difficult to resist a springing order so that the parties do not trouble the Court again. Further, Counsel for the wife argued his client is entitled to seek orders with "some teeth";
•it is common ground that outside the value of the husband's business entities, the asset pool comprises the Town B property and superannuation interests. Whilst the parties own the Town A property, it is fully encumbered;
•it is the wife's case that the husband will need to raise significant capital to make a cash payment to her, to effect property settlement, which will likely trigger the need to sell assets. If this were to transpire, this would have an impact on Mr and Ms J;
•according to the Single Expert Witness, Ms A, the pool is valued at anywhere between $14 million to $25 million;
•it is, in essence, more efficient and cost effective to have the argument at trial so that enforcement proceedings are not necessary. Counsel for the wife argued that there may be a jurisdictional issue in respect to the wife's capacity to join the Trustees in enforcement proceedings once the power pursuant to s 79 of the Family Law Act 1975 (Cth) ("the Act") is exhausted;
•Counsel for the wife was somewhat perplexed by the joint opposition of the husband and the Trustees to the joinder application, as he could not see the prejudice, nor did he consider it likely to be oppressive for the Trustees to articulate whether they opposed the orders or not, and if so, to provide their view as to why. He argued that the Trustees could attend the first day of trial and be heard in respect to their position. He did not consider it necessary for the Trustees to be required to participate in the trial to any greater extent than that;
•Counsel for the wife referenced drag-along rights in the shareholder agreement in support of the wife's application; and
•the wife wants to keep costs to a minimum, and she appreciates that if the Trustees were joined and no orders were made which impacted on them, it is likely the Trustees' costs would be in issue. Counsel for the wife asserted that this was the risk the wife was willing to take, as she did not want to be hamstrung at the trial.
31In respect to the child support departure issue, the wife's case is again that it is likely to be more efficient and cost effective to deal with this issue at trial, as opposed to having the parties engaged in further litigation in a few years' time when Child A is nearing the end of her primary school years. Counsel for the wife did not consider the introduction of this cause of action likely to impact the length of the trial. The wife gives evidence about the husband placing conditions upon his agreement for Child A to attend [School A], and his general refusal to co-contribute to medical and health-related expenses and extra-curricular activities in support of her application.[3]
[3] See Wife’s Affidavit filed 25 July 2022 [40] - [48].
32The wife says that during the relationship, Child A and Child B were placed on the lists for School A and [School B] respectively. Child A has now been accepted into School A for the commencement of Year 7 in 2025.
33Counsel for the wife appeared to concede that the wife's evidence in respect to this aspect of her application was brief and that the Court was not provided with certain documents required by the Family Court Rules 2021 (WA) ("the Rules").[4] Counsel argued that the wife had not yet been given leave to seek child support departure orders as a reason for the non-compliance.
[4] Family Court Rules 2021 (WA) r 67.
34Whilst I can, on the one hand appreciate the argument, it lost its strength, in my view, when Counsel for the wife advised the Court that the necessary documents could be found in the tender bundle that I referred to earlier and which was not before the Court. The requirement to provide the documents referred to in r 67 is not discretionary and they are to be attached to an affidavit, not included in a tender bundle provided to the Court on the day of a hearing. The inclusion of the relevant documents in the tender bundle indicates to me that the wife recognised the deficiency in her documents, which her legal advisers attempted to rectify at the last minute.
35Counsel for the wife argued that in the event the wife's application to further amend her response is unsuccessful, it would be tantamount to a summary dismissal.
The husband's position
36The husband's position in respect to the wife's joinder application is as follows:
•the wife is fixated on wanting to impose her belief on Ms A that the value of the husband's entities is worth more than it is. Counsel for the husband argued that Ms A valued the entire group at approximately $11 million;
•the Court should query the wife's bona fides in bringing the application as her clear intent was to cause the husband maximum commercial grief. He further argued that the wife only wanted to join the Trustees because of her misconstrued belief that the company was worth more than it is;
•he strongly disputed Counsel for the wife's assertion that all the Trustees were required to do was "turn up" on the first day of trial and express an opinion about the orders sought by the wife;
•the Trustees are in the invidious position of having no knowledge of the proceedings, importantly as to the relevant valuations;
•the wife's application is premature in that it put the "cart well and truly before the horse".[5] Counsel for the husband argued that it anticipates success on the part of the wife and a failure by the husband to comply; and
•notwithstanding the wife's application was filed on 25 July 2022, it was not served on the Trustees until 29 November 2022, with no explanation provided as to why there was such a significant delay in service.
[5] Husband’s Written Submissions [37].
37In respect to the child support departure issue, the husband says it is not necessary. It is the husband's case that he pays child support as assessed by the Child Support Agency. The husband says that according to the wife's most recently filed Form 13 Financial Statement (30 June 2021), the wife had approximately $2,486 in income over expenditure (including weekly child related expenses for the children) and $228,552 in her personal bank account. The husband further said that in 2018/early 2019, the wife unilaterally removed $700,000 from a joint account, which was the catalyst for him commencing property proceedings.[6]
[6] Pursuant to orders made in chambers on 17 September 2019, of the total funds removed by the wife, she received $322,746.38 as and by way of partial property settlement pursuant to paragraph 7 of the orders, with the balance of funds withdrawn and funds remaining, being $266,167.28, would be dealt with at trial.
38Counsel for the wife was critical of the lack of conferral in respect to the child support departure issue. By consent, the Court took into evidence a letter from the husband's solicitor to the wife's solicitor dated 28 June 2022, which contained an open offer in respect to Child A's attendance at School A, which included a proposal that the parties each be at liberty to attend the children's extra-curricular activities irrespective of whose care the children are in, to which the wife is firmly opposed.[7] Counsel for the husband argued that the parties should discuss issues pertaining to what high school the children should attend after these proceedings concluded and the heat of the litigation was no longer an issue. He strongly argued that the wife was using the application to, in essence, secure the children's attendance at School A and School B, in circumstances where there may be cheaper and more convenient schools for the children to attend.
The Trustees' position to the joinder application
[7] Exhibit A1.
39Counsel for the Trustees argued that the wife was having a "bob each way". He raised concern about the potential inconvenience to the Trustees in putting them to the time and expense of being included in proceedings that do not involve them and that they know nothing about.
40The Trustees further argued that they should not be put in the position of having to take advice in respect to the issue until there is a factual basis for the orders sought by the wife. Counsel for the Trustees submitted that if the wife's application to join the Trustees was acceded to and the Court ultimately did not make orders as sought by her, the parties and the Court's resources would have been wasted dealing with an issue that was ultimately nugatory.[8]
[8] Trustee’s Written Submissions [4].
41It is the Trustees position that the orders sought by the wife are enforcement in nature and should only be sought if enforcement proceedings become necessary. Counsel for the Trustees rejected Counsel for the wife's submission about potential jurisdictional issues in joining a third party to enforcement proceedings describing that submission as "extraordinary".
42The Trustees only seek to be involved if need be. It is their case that no order has yet to be made that impacts the shareholding and that the wife's application is based on speculation. Counsel for the Trustees submitted that the joinder may only be necessary if an order is made for the sale of all the shares, the likelihood of which he could not comment, as he was not privy to any of the relevant valuations, but he drew the Court's attention to his understanding that the husband has other companies in which the Trustees have no interest in, presumably because this might provide the husband with a source of revenue to draw on to make a payment to the wife.
43Counsel for the Trustees was critical that no offer of costs had been made by the wife in seeking to join his clients. He stressed that the litigation was highly complicated, and his clients were strongly opposed to joinder at this stage.
44The Trustees sought orders in terms of their Minute of Proposed Orders.
Legal principles: applications to amend
45The principles which the Court must consider when considering an application to amend are well settled. In particular, I have regard to the observations made by Kirby J in Lindon v Commonwealth (No 2) (1996) 70 ALJR 541 where his Honour's observations are as relevant to giving the wife a further opportunity to amend her response as they are to summary dismissal, particularly in circumstances where the material filed by the wife in support of her application for a child support departure order is brief and non-compliant with the Rules.
46His Honour observed the following principles at 544 ‑ 545:
1.It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided;
2.To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;
3.An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment;
4.Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts;
5.If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading. A question has arisen as to whether O 26, r 18 applies to part only of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim; and
6.The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
47In Gallo v Dawson (1990) 64 ALJR 458 in the context of the exercise of discretion to extend time, McHugh J observed as follows at 459:
The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-264; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice.
48In Aon Risk Services Australian Ltd v Australian National University (2009) 239 CLR 175, the High Court considered at length the appropriateness of an exercise of discretion to grant leave to amend a cause of action. Aon considered such an application in the context of proceedings which had reached an advanced stage and proceeded in circumstances where each party was represented by Senior Counsel.
49The High Court subsequently allowed the appeal. The observation of French J articulates the history of the matter and the issues raised by the application to amend in the circumstances of that case (at 182):
Save for the dissenting judgment of Lander J in the Court of Appeal, the history of these proceedings reveals an unduly permissive approach both at trial and appellate level to an application which was made late in the day, was inadequately explained, necessitated the vacation or adjournment of the dates set down for trial, and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so.
Discussion
50As noted earlier, the wife seeks an order to enable her to further amend her response now for the third time to introduce child support departure orders and to join the Trustees. I have carefully considered and applied the principles set out above in respect to both aspects of the wife's application, which I intend to deal with separately, as I consider the joinder issue requires the Court to have regard to further legal principles relevant to that specific issue.
Legal principles: joinder of third parties
51These proceedings are determined by the Family Law Act 1975 (Cth).
52Rule 96(1) of the Rules provides "a person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the Court to determine all of the issues in dispute in the case, must be included as a party to the case."
53Pursuant to r 180(1)(a), after a case has been allocated a date for trial, any amendment to add a new party can only occur with the permission of the Court.
54The authorities in respect to joinder establish the following principles:
•whilst the Rules do not, by their terms, require a party (who is applying for leave to join a third party) to establish a cause of action and supporting case which, taken at its highest, is arguable, that is nevertheless the test that has been regularly adopted by the Court;[9]
•for it to be necessary to join a third party, to enable a Court to determine all matters in dispute, requires something more than "useful" or "expeditious";[10]
•it is both good case management and fair to all parties, particularly third parties, for the jurisdictional base of a claim to be determined as a preliminary issue, where it is appropriate and practical to do so;[11]
•where a cause of action, recognisable at law, against a third person is particularised, then it is highly likely that joinder will be necessary for the court to completely and finally determine all matters in dispute;[12]
•relevant considerations to consider whether to join a party include, but are not limited to, the interests of justice, whether the party seeking the joinder is acting in good faith and not unnecessarily delaying the proceedings, whether the joinder would be "obviously futile", whether any injustice with particular focus on the stage in which the proceedings are at, cannot be adequately compensated for and the question of case management.[13]
Discussion: application to join Trustees
[9] Wayne & Dillon & Dillon [2008] FamCAFC 204; Southwell & Jane [2011] FamCA 663.
[10] Wayne & Dillon & Dillon [2008] FamCAFC 204
[11] Gould and Gould (1993) FLC 92-434, 80,448 per Fogarty J.
[12] Wayne.
[13] Lukies v S2V Consulting Pty Ltd (2018) 333 FLR 226. While the Court in Lukies referred to the Federal Circuit Court Rules 2001 (Cth), I consider the comments have application in these proceedings.
55To determine this issue, the Court must carefully consider the wording of r 96(1), which has two limbs.
56 First, a proposed party must have rights that would be directly affected by an issue in the case. At first blush, it is as Counsel for the wife submits, difficult to understand any objection to the joining of the Trustee to the proceedings. Their rights may be impacted if the husband is (emphasis added) required to sell shares or assets to meet any order made by the Court for the husband to make a cash payment to the wife.
57 Second, a proposed parties' participation is necessary (emphasis added) for the Court to determine all (emphasis added) issues in dispute in the case.
58Whilst not intended for this purpose, Counsel's submission that the Trustees could attend on day one of the trial and provide their position, and thereafter, have no further substantive role in the trial underscores the reality that the Trustees' participation in the trial is not necessary for the Court to determine all (emphasis added) issues in dispute in the case. Further, in my view, "the case" is confined to the current proceedings before the Court and does not include any future enforcement proceeding that may or may not be commenced or necessary.
59To further highlight the point, at this juncture, the Court does not have an updated valuation from Ms A, and irrespective of the opinions expressed by her in her updating report, given how this matter has been litigated thus far, she is highly likely to be robustly cross-examined about her opinions and her methodology. It is only after this process, and cross-examination of the parties and the other professional witnesses, that the Court will be able to determine the asset pool, which is a necessary starting point before turning its mind to any orders the Court considers just and equitable in the circumstances. The Trustees can offer nothing to this process, and it cannot, in my view, be successfully argued that their participation in the trial is therefore necessary for the Court to determine all issues in dispute in the case, unless the Court, at trial, can be convinced to make a springing order of the kind sought by the wife. To do this, much will turn on the evidence and the Court's findings about valuations and the parties' bona fides and credibility.
60The wife's application is entirely speculative, in that, it is founded on certain assumptions, including but not limited to, the Court's finding in respect to the size of the asset pool, the amount to be paid to the wife by the husband to affect a just and equitable property settlement, the husband's likely inability to raise the funds to meet any payment he is required to make to the wife, his potential non-compliance with any orders the Court makes in respect to the same, and further, that the trial Judge agrees that a springing order is appropriate in the circumstances.
61Whilst I have highlighted my view that the second limb of r 96 has not been met, I also do not accept that the Trustees rights may be directly affected by an issue in a case, as this is also currently speculative for the reasons set out in the preceding paragraph.
62The wife argues that it would be cost and time effective to join the Trustees at this juncture, given the amount of time the parties have been litigating. Counsel for the wife argued that acceding to the wife's application would prevent the parties from taking up further Court time and resources in the future. Whilst I welcome the submission, noting comments made by me at the interim hearing about proportionality, in circumstances where the Court was advised that the legal costs were somewhere near $1 million, I am required to consider the convenience to both parties and the Trustees when considering the wife's application. In doing so, I am not satisfied that the balance of convenience weighs in the wife's favour.
63The primary purpose in seeking to join the Trustees at this late stage in the proceedings is to afford them procedural fairness and to provide them with a right to be heard. Whilst the Court must always be cautious in taking steps that may impact on the rights of third parties, who is in this case a minority shareholder, the Court should also exercise restraint in acceding to applications to join third parties, particularly where the third party themselves are strenuously opposed to the joinder, and where there is no clear need to join them at this stage, given the highly speculative nature of the wife's application.
64These proceedings are complex. I do not accept that the Trustees need only turn up on the first day of trial and express an opinion about the wife's proposed orders. To come to an informed position about the same, the Trustees would need to be provided with certain documents, including a schedule of assets and liabilities for the parties, valuations, information about ownership and the parties' trial material, which they would need to take legal advice about. Further, the Trustees as parties to the litigation would be entitled to file material in the proceedings if they wished to do so. Leaving aside the fact the trial is looming and could be impacted by the Trustees' availability to be ready within a short timeframe (particularly given Christmas is fast approaching), there is a cost attached to the exercise, which may not be insignificant for the Trustees.
65Further, s 90AE(3) of the Act sets out the circumstances in which the Court can make an order binding a third party. Section 90AE(3) refers to the Court being satisfied that the order takes into account the matters mentioned in sub-s 4, which includes the taxation effect (if any) of the order on the third party. No evidence has been provided whatsoever about this issue nor could it be at this point because of the uncertainty both in respect to the asset pool and the orders the Court might make at the conclusion of the trial. Even if this requirement could be addressed now, it would likely result in the Trustees incurring costs, in circumstances where the advice would be entirely dependent on the outcome of the trial.
66Whilst Counsel for the wife is of the view that any impact on the Trustees could be mitigated via a costs order if the wife's application is unsuccessful, this approach ignores the fact that the Trustees may not have the funds readily available to go through this process at first instance, nor does it take into consideration the time the Trustees would need to expend in respect to the same. Given the speculative nature of the wife's application, including the possibility that the Court may ultimately make orders that have no impact whatsoever on the Trustees, I consider the potential inconvenience to and imposition on the Trustees to be of significance to my decision.
67Whilst I consider the wife's application was brought in good faith, I cannot ignore the fact that the wife has known about the Trustees' interest in the company since these proceedings were commenced. Whilst I appreciate the wife's application is now brought having regard to her current view about the potential increase in the value of the Group, which is currently speculative, it is an application that is brought late in the day, and in circumstances where the joinder is not necessary to protect her rights (or potential rights) or those of the Trustees at this stage. If it becomes apparent at the trial that the Trustees should be joined, this can be addressed with the trial Judge. Further, the trial Judge can frame orders to minimise any potential impact on the Trustees if his Honour considers, having heard all the evidence, that this is a likely scenario.
68I do not accept the submission made by Counsel for the wife that there could be a jurisdictional argument as to whether the wife would have a right to join a third party to an enforcement proceeding. Leaving aside the fact this can be addressed in the crafting of any final orders made by the trial Judge, there is nothing stopping the Trustees being served with any enforcement application being brought by the wife and seeking to be heard in the enforcement proceedings, if they wish to do so, subject to any orders being sought which may affect their property rights or be relevant to the exercise to the Court's general discretion to enforce.
69To the extent that it may be relevant, I observe that Mr J is a witness for the husband and is likely to be called to give evidence at the trial. If, it is as simple as asking him what his position is to the proposed orders sought by the wife, and if it were to go no further than that, this could be canvassed with him at the trial. He may or may not feel comfortable providing an answer because of the lack of information he has about matters material to that consideration, but he could be asked.
70I agree with submissions made by Counsel for the husband that the wife's application "puts the cart before the horse". The Trustees have already been put to the expense of seeking legal advice and briefing Counsel for the interim hearing. I further accept Counsel for the Trustees submissions that the Trustees would be required to go to the time and expense of taking advice and possibly preparing any material upon which they sought to rely if they were joined at this juncture, and further, agree that it is not appropriate that they be put in that position until the need for their involvement crystalises. I am satisfied that the balance of convenience falls in their favour and that they should not be further inconvenienced or financially impacted by these proceedings, which do not directly involve them, at this stage of the proceedings.
71The authorities establish that for it to be necessary to join a third party, to enable a Court to determine all matters in dispute, requires something more than "useful" or "expeditious", which I am not satisfied the wife has established.
72Submissions filed on behalf of the Trustees draws the Court's attention to the matter of B Pty Ltd and Ors & K and Anor (2008) 39 Fam LR 488. In my opinion, the facts in the matter before me go further than the commentary offered by the Full Court at [52] of B Pty Ltd because this joinder application is grounded in a "potential" breach of final orders made by the Court after the trial and not just in respect to facts being asserted and proved. It requires a positive action by the husband to breach orders, and it is that speculative nature of the wife's application, which I have trouble with.
73Counsel for the husband referred the Court to the decision of Tyson J in [2019] FCWA 167, which Counsel for the wife submitted could be distinguished from this case for two reasons. First, in this matter, the wife is simply wanting to get the appropriate people before the Court. Second, in the matter before Tyson J, the total asset pool was just shy of $70 million. In that case, the Court decided the adjusting payment was $1.75million, which was a very modest sum in comparison to the size of the asset pool. The Court ultimately determined it would be disproportionate to join the third party in that case. In this case, the pool is smaller and as such, I accept that any payout to be made by the husband to the wife is likely to have a greater impact on the parties and the husband's capacity to pay, but again, it is entirely speculative and subject to the Court's determination about the size of the pool and what is just and equitable in the circumstances. Overall, I do not consider this case to be helpful in the present situation because of the distinguishing circumstances.
74Whilst I accept the submissions put forward on behalf of the wife in respect to the potential impact on the Trustees should orders be made that impact the assets of Trust C, and whilst I am mindful of the cautious approach the Court should have when considering decisions that could impact on the rights of minority shareholder, like the Trustees, I am not satisfied that it is necessary or appropriate to join the Trustees at this point in time for the reasons provided.
75I do not consider it appropriate to make orders containing the recitals or in terms of paragraph 2 of the Minute filed on behalf of the Trustees for the hearing on 13 December 2022. The issue of joinder has been dealt with and should only be relitigated if there is a significant change in circumstance. The recitals may be appropriate subject to the final orders made by the Court following trial.
76The Trustees sought their costs be reserved. Subject to hearing from the parties, I intend to reserve the Trustees costs to the trial Judge. However, in the event there is no issue relevant to the Trustees arising from the trial, the issue of the Trustees' costs in respect to this application should be referred to me for determination.
Discussion: application to amend wife's response to seek child support departure orders
77Counsel for the wife made the submission that had the wife filed her application earlier, leave would not be necessary to introduce new causes of action. Whilst that is true, the Rules in respect to amendment are there for a reason. In all civil litigation, the early identification of the legal and factual bases of a claim is essential both to define the issues and to thereby enable the other party to clearly understand the case to be met.
78As noted above, this issue was considered by the High Court in Aon which held that there would have been significant prejudice to the appellant had the Court allowed the introduction of new claims late in the litigation process, and that indemnity costs would not overcome any prejudice to appellant from the substantial delay and necessity of defending new claims. The decision not only affirmed the landscape of amendment applications, but also the Court's approach to the impact of such applications on the proper and efficient use of public resources. In respect to the latter, Gummow J at [93] said:
the rules concerning civil litigation no longer are to be considered as directed only to the resolution of the dispute between the parties to a proceeding. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the Court and upon other litigants.
79Consideration of the principles espoused in Aon are relevant to the wife's application, whilst filed in late July 2022, was brought after the parties had filed their trial material and attended a readiness hearing. Whilst I accept the Court's role in the late hearing of her application, it is now being considered some three months before trial, and the husband must be provided with an opportunity to properly respond, which I am concerned may be impacted by the time of year and the flurry of activity that accompanies trial preparation.
80As highlighted earlier in my reasons, the wife's evidence in her supporting affidavit about this issue was brief and was non-compliant with the Rules. Counsel for the husband argued that if the wife was successful in this aspect of her application, which he strongly argued she ought not be, she would need to file a further affidavit setting out her evidence in support of the orders sought by her, which would need to be filed prior to the date the husband is required to file his updating trial affidavit, so he can incorporate his evidence in respect to this issue in that document.
81Counsel for the wife argued that the Court's refusal to allow the wife to further further amend her application to seek a child support departure order would be tantamount to summary dismissal, an argument that side-steps the late introduction of a new cause of action by the wife.
82Ultimately, this issue requires the Court to balance the potential prejudice to the wife in not allowing her to introduce this cause of action with that of the husband, who has a right to know the case he is facing and be provided with adequate time to provide his response. In addition, the Court must consider whether the wife's application, if acceded to, is likely to have any impact on the trial, given the Court's requirement to consider such issues having regard to the Court's limited resources.
83Dealing with the latter, namely the potential impact on the parties and the Court's resources, which takes on significant relevance if allowing the introduction of a new cause of action so late in the proceedings is likely to delay the trial proceedings. As I have already mentioned, both the financial and child related aspects of these proceedings have been actively litigated. I have read close to 1000 pages of documents in preparation for the interim hearing. In the grand scheme of these proceedings, where there is already an abundance of evidence before the Court about issues central to the determination of a child support departure application, I cannot comfortably accept that if the Court accedes to the wife's application, it is likely to significantly drive-up cost, be oppressive for the husband to respond to, or extend the length of the trial.
84Ultimately, if I allow the wife to amend her response to include child support departure orders, the people who are most likely to be prejudiced are the wife and her legal advisers, as her documents will need to be prepared over the Christmas and New Year period so that the husband's legal advisers and the husband can consider the same when preparing the husband's updating trial affidavit. To be frank, I cannot see how either party's evidence about this issue is going to be extensive given the evidence already before the Court as to their financial circumstances, the children, and the co-parenting relationship.
85Counsel for the husband argued that the parties should have the opportunity to confer about issues such as this after the litigation is finalised and the heat is taken out of the interparental relationship, which I whole-heartedly agree with. However, the making of court orders does not preclude parents from agreeing something different. Often, orders serve as a safety net for when agreement cannot be reached. In my experience, this safety net becomes particularly valuable when conflict between parents is high and trust between them is low, as is the case here.
86An order seeking to amend an application or response, of itself, is not a parenting order, and the best interests of Child A and Child B are not the paramount consideration in determining whether such an order should be made. However, a consideration of the children's best interests must also inform the discretion for the following reasons.
87Whilst I wish that I shared Counsel for the husband's optimism about the potential improvement in the co-parenting relationship after the parties' exit the Family Court, I cannot. It is evident from the documents filed and Duncanson J's earlier judgment that interparental conflict is a significant issue for the children, which quite frankly, is sad. I feel like a broken record every time I record that one of the most significant risk issues facing children and young people in this Court, is the conflict between their parents. It can have longstanding adverse consequences for them.
88As it currently stands, Child A and Child B's parents cannot attend extra-curricular activities and similar events together such is the poor state of their relationship. Children are astute, and in my experience, are often sensitive to their parent's words and body language. Even if the children genuinely desired both parents to be present at sport, extra-curricular and school events that they are involved in, on the evidence before the Court, I have a real concern that those events would become anxiety-provoking for the children, largely because of anticipatory anxiety arising because of their parents being in the same place and time. This one example, of which there are many, highlights the high level of conflict currently existing between the parents and the potential impact of the same on the children.
89I cannot reasonably accept, given the state of the current relationship between the parents, that much will change in the short to medium term. As a result, the people who will suffer the most, if their parents cannot agree about these matters, are the children. Whilst Counsel for the husband argued that Child A does not start high school until 2025, that is only two years away, which is not a long-time, particularly if the children are to attend private schools. In my experience, most high schools offer open days and other events to future students in Year 6, which Child A would no doubt want to participate in. It is also a time of excitement and nervous anticipation for the children themselves and Child A would benefit from the certainty of knowing which school she will be attending.
90Further, and again because of the current relationship between the parents, I consider it highly unlikely that there will be agreement between them about any myriad of issues relating to the children, particularly if they have different perspectives on the subject, which is likely. I mean this as no disrespect to the parties, based on what I have read, if there is a point of difference to take, it is taken.
91I consider issues such as the children's high schooling and extra-curricular activities another platform upon which the parents can argue, which if I am right, will have a significant impact on the children given the importance of these issues to them.
92The parties have a 5-day trial listed to commence in three months. Ultimately, I am not satisfied that the parties or the Court will be unduly prejudiced in dealing with the additional issue of child support departure orders at trial given the other issues to be determined by the Court and the inter-related nature of the evidence filed in respect to those matters.
93On balance, I consider the people most likely to be impacted by a refusal to accede to the wife's application to be the children. It cannot be in their best interests, or their parents for that matter, for the parties to lose the opportunity to have the issue dealt with as part of these proceedings in circumstances where, if the Court does not and the parties cannot agree, they will be put through the time and expense of further litigation in the space of a few short years.
94In coming to this conclusion and based on the evidence currently before the Court, both parents are in strong financial positions and are likely to be able to meet all relevant expenses pertaining to the children, even if those expenses were not shared equally, which the trial Judge may consider relevant in his determination of the issue.
95Ultimately, if the wife is unsuccessful in achieving the orders sought by her at trial, any additional expense incurred by the husband in responding to the new cause of action can appropriately be dealt with by an order for costs.
Proposed orders
96 It is for these reasons that I propose to make the following orders.
1.The tender bundle of documents uploaded to the e-Courts portal by the solicitors for the Respondent, [MS BASSETT], on [the hearing date] be uplifted from the Court e-file.
2.By no later than 4.00pm on Friday, 14 January 2023, the Respondent have leave to file and serve:
(a)a Further Further Amended Form 1A response to include child support departure orders; and
(b)an affidavit in support, which is compliant with the Family Court Rules 2021 (WA).
3.All interim applications and responses be and are hereby dismissed, save as to costs.
4.The costs of the proposed Second Respondents, [MR AND MS J] as trustees for the [Trust D], to be paid by the Respondent as agreed, and in default of agreement, the said costs are to be taxed.
5.There be leave to the parties to request a relisting before the trial Judge in respect to disclosure and the issuing of subpoenas upon conferral and reasonable notice to the other party.
6.The proceedings otherwise stand adjourned to the trial to commence on [in early] 2023.
AND IT IS NOTED THAT:
The solicitors for the Applicant advised the Court today that the parties have complied with paragraphs 2, 3 and 8 of the orders [made on the hearing day].
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
MG
Associate
23 DECEMBER 2022
11
0