Ivers & Sethi
[2021] FamCA 293
•13 May 2021
FAMILY COURT OF AUSTRALIA
Ivers & Sethi [2021] FamCA 293
File number(s): DGC 4056 of 2019 Judgment of: WILLIAMS J Date of judgment: 13 May 2021 Catchwords: FAMILY LAW – JOINDER – Application to join the respondent’s former wife as a second respondent to property proceedings in circumstances where the applicant alleges that a property settlement entered into between the respondent and his former wife, during the de facto relationship between the parties was to minimise any claim the applicant may have to a property settlement – where the proceeds of sale of a property were distributed 80% as to the respondent’s former wife and 20% to the respondent and the respondent’s wife applied the proceeds of sale to the purchase of another property – applicant alleges the respondent has an equitable interest in the property currently held by the respondent’s formal wife, or alternatively, the transaction between the respondent and his former wife should be set aside – Held respondent’s formal wife should be joined as a second respondent to the substantive proceedings. Legislation: Family Law Act 1975 (Cth)
Family Law Rules 2004 rr. 6.02, 6.03
Federal Magistrate’s Court Rules 2001 r. 11.01(1)
Cases cited: B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113
Wayne & Dillon and Anor [2008] FamCAFC 204
Number of paragraphs: 26 Date of hearing: 12 April 2021 Place: Melbourne Counsel for the Applicant: Mr Nagalingam, Solicitor Solicitor for the Applicant: Pentana Stanton Lawyers Counsel for the Respondent: Mr Ibrahim, Solicitor Solicitor for the Respondent: Rjs Legal Group Pty Ltd ORDERS
DGC4056 of 2019 BETWEEN: MS IVERS
ApplicantAND: MR SETHI
Respondent
ORDER MADE BY:
WILLIAMS J
DATE OF ORDER:
13 MAY 2021
THE COURT ORDERS THAT:
1.Ms B Sethi be joined as a second respondent to these proceedings.
2.Within 28 days of these Orders, the applicant file and serve a Statement of Claim against the second respondent.
3.The Application in a Case filed 18 November 2020 be otherwise dismissed.
4.All extant applications be listed before a Registrar of the Family Court of Australia for mention as soon as practicable.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ivers & Sethi has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Williams J
This matter was listed for determination in the Judicial Duty List on 12 April 2021.
The applicant de facto wife sought to join the husband’s ex-wife, with whom he has since recommenced a relationship, as a second respondent to the proceedings.
The substantive application is for a property settlement between the parties to a de facto relationship. The applicant asserts that the first respondent and the proposed second respondent conspired to take advantage of the applicant, by entering into an informal property settlement with each other in 2014, during the de facto relationship, so that the proposed second respondent received the majority of the proceeds of sale of a property situated at Suburb D. She asserts that the informal property settlement did not reflect the proper entitlements of the first respondent.
Background
The applicant and the respondent commenced a relationship on 4 September 2012 and separated on 26 June 2018, when the respondent recommenced a relationship with his ex-wife, the proposed second respondent. The respondent and the proposed second respondent were married for 35 years.
At the commencement of the relationship, the applicant asserts that she was the registered proprietor of the three properties and that the respondent was a co-registered proprietor of the property situated at C Street Suburb D (“the Suburb D property”).
In November 2014, just over two years after the commencement of the de facto relationship, the respondent and proposed second respondent sold the Suburb D property for $509,000. At that time, there was a mortgage of approximately $120,000 encumbering the property and the applicant asserts that the equity was there for approximately $389,000.
The proceeds of sale of the Suburb D property were distributed so that the respondent received $80,000 and the proposed second respondent received in excess of $300,000. The respondent distributed his share of the proceeds of sale, into superannuation accounts and approximate $30,000 into a joint business venture.
Around November 2015, the proposed second respondent purchased a property situated at F Street, Suburb G, for the sum of $370,000. It is asserted that the purchase price was funded by $280,000 from the proceeds of sale of the Suburb D property and the balance of $90,000 was obtained by way of mortgage from the Commonwealth Bank.
Documents relied on by the parties
The applicant relied upon the following documents:
(a)Application in a Case filed 18 November 2020;
(b)Applicant’s affidavit filed 16 November 2020.
The respondent relied upon the following documents:
(a)Response filed 29 January 2021;
(b)affidavit of respondent filed 28 April 2020;
(c)affidavit of respondent’s lawyer filed 19 November 2020 (filed in support of the respondent’s application for summary dismissal);
(d)affidavit of proposed second respondent filed 9 April 2021.
Relevant Legal Principles
In order to consider the relevant principles for joinder of a party to the proceedings, I must have regard to rule 6.02(1) and 6.03 of the Family Law Rules 2004, which are as follows:
6.02 Necessary parties
(1)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 issues in dispute in the case, must be included as a party to the case.
Example:If a party seeks an order of a kind mentioned in section 90AE or 90AF of the Act, a third party who will be bound by the order must be joined as a respondent to the case.
(2)If an application is made for a parenting order, the following must be parties to the case:
(a)the parents of the child;
(b)any other person in whose favour a parenting order is currently in force in relation to the child;
(c)any other person with whom the child lives and who is responsible for the care, welfare and development of the child;
(d)if a State child order is currently in place in relation to the child—the prescribed child welfare authority.
(3)If a person mentioned in subrule (2) is not an applicant in a case involving the child, that person must be joined as a respondent to the application.
Note 1: The court may dispense with compliance with a rule (see rule 1.12).
Note 2:Pre‑action procedures must be complied with by all prospective parties under rule 1.05.
6.03 Adding a party
(2)A party may add another party after a case has started by amending the application or response to add the name of the party.
(3)A party who relies on subrule (2) must:
(a)file an affidavit setting out the facts relied on to support the addition of the new party, including a statement of the new party’s relationship (if any) to the other parties; and
(b)serve on the new party:
(i)a copy of the application, amended application, response or amended response; and
(ii)the affidavit mentioned in paragraph (a); and
(iii)any other relevant document filed in the case.
Note 1: For amendment of an application, see Division 11.2.2.
Note 2:If a Form is amended after the first court date, the Registry Manager will set a date for a further procedural hearing (see subrule 11.10(3)).
Note 3:Pre‑action procedures must be complied with by all prospective parties under rule 1.05.
In Wayne & Dillon and Anor [2008] FamCAFC 204 (“Wayne & Dillon”), Warnick J considered the meaning of the word necessary, in the context of rule 11.01(1) of the Federal Magistrate’s Court Rules 2001, which is similar to rule 6.02(1).
In that decision, at [18] Warnick J said:
[18] The word “necessary” in rule 11.01(1) must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
In Wayne & Dillon, at [19], Warnick J further stated that the court must consider whether the applicant had set out sufficient facts to identify a cause of action, recognisable at law, against a third person, and if so, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute”.
In B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 the full Court said at [52]:
[52] We do not accept that it is proper to allow joinder of third parties merely upon the formulation of a paragraph in, or to be added to, an application, on the basis that at trial facts to support the application may be asserted and proved. Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.
Submissions of the parties
I will address the submissions of the parties.
In support of the application for joinder, the solicitor for the applicant submitted that it was necessary to join the proposed second respondent as a party to the proceedings for the following reasons:
(a)the purported property settlement between the respondent and the proposed second respondent occurred between September and November 2014, two years after the commencement of the defacto relationship;
(b)following the sale of the Suburb D property in November 2014, the respondent voluntarily forfeited his entitlement to a just and equitable property settlement, citing his infidelity is the primary reason for doing so;
(c)the division of the property resulted in 80% of the asset pool to the proposed second respondent and 20% to the respondent;
(d)the division referred to in the preceding paragraph was a significantly unjust settlement to enable the respondent to mitigate the asset pool and avoid any potential claim which may arise from the de facto relationship;
(e)it is unlikely that the settlement entered into between the respondent and the proposed second respondent would have been approved by the court;
(f)the respondent’s lack of bona fides is demonstrated by the resumption of his relationship with the proposed second respondent;
(g)the proposed second respondent is the sole proprietor of the Suburb G property, which does not reflect the actual entitlement to the property;
(h)the respondent has an equitable interest in the Suburb G property;
(i)as a settlement between the applicant and the respondent would include the respondent’s equitable interest in the Suburb G property, it is appropriate to join the proposed second respondent to these proceedings.
In resisting the application for joinder, the Solicitor for the respondent and proposed second respondent submitted as follows:
(a)the division of property following the sale of the Suburb D property was not a sham and was reflective of a 35 year marital relationship between the respondent and the proposed second respondent;
(b)the proposed second respondent was a victim of an extramarital affair and during her marriage with the respondent she made significant contributions and her future needs would justify the settlement reached between them;
(c)the Suburb D property was sold in circumstances where:
(i)the respondent had obtained a business loan of $240,000 in October 2014 to purchase a franchise in Suburb H;
(ii)the proposed second respondent signed a guarantee for the business loan obtained by the respondent;
(iii)the proposed second respondent could not meet the payments relating to the business loan obtained for the benefit of the respondent;
(iv)the respondent and the proposed second respondent agreed to sell the Suburb D property in November 2014, to enable the business loan to be discharged;
(d)the division of property between them reflected the duration of the marriage, the contributions made by the proposed second respondent, the second respondent had been prepared to guarantee the business loan obtained by the respondent, to enable him and the applicant to operate the business, the fact that the second respondent needed to find a place to live and that the parties did not want to spend money on lawyers and preferred to reach an amicable agreement;
(e)of the $80,000 the respondent received from the sale of the Suburb D property, $40,000 was paid to reduce the business loan and the other $40,000 was applied to the business;
(f)in 2017, the respondent transferred his interest in the business to the applicant and had nothing further to do with operating the business from that time.
Discussion
The substantive dispute between the parties is fraught with claim and counterclaim as to the disposition and acquisition of various assets during the six-year relationship. Absent a testing of evidence it would be impossible to establish the veracity of each party’s claim.
On 27 January 2021, Judge Blake, in the Federal Circuit Court, dismissed an application for summary dismissal, filed by the respondent on 15 January 2021, and ordered a transfer of the matter to the Family Court.
It is evident from the evidence of both the respondent and the proposed second respondent that there was some intertwining of their finances in 2014, during the relationship between the applicant and the respondent. That involved the proposed second respondent agreeing to guarantee a substantial business loan to further the business ambitions of the applicant and the respondent. Why the proposed second respondent was prepared to do so is a mystery.
Whilst the applicant may well face an uphill battle in the substantive proceedings, and I note that a Judge of the Federal Circuit Court was not prepared to summarily dismiss her application, it is apparent that whether or not the property settlement entered into between the respondent and the proposed second respondent was designed to thwart or minimise a claim by the applicant, or whether it was entirely appropriate, will require cross-examination of all relevant parties, including the proposed second respondent. That could be achieved by the proposed second respondent giving evidence and being subject to cross-examination during the trial. That is a matter for the respondent.
However, if the respondent failed to call the proposed second respondent as a witness, the applicant may well be significantly disadvantaged. If the applicant is correct in her assertion, that the informal property settlement was designed to minimise her claim, and that the respondent has an equitable interest in the Suburb G property, then it would be necessary to join the proposed second respondent to enforce any entitlement she may have.
Although the material filed by the applicant is in general terms and is not cast in terms of a formal claim, it is evident that she is alleging that the respondent has an equitable interest in the Suburb G property, to which she may have an ultimate entitlement and or that the settlement between the respondent and the proposed second respondent, should be set aside.
I am satisfied that the material and submissions of the applicant that it is necessary to join the proposed second respondent to agitate all issues between the parties and that there are sufficient facts which enable me to conclude that the law arguably provides the relief sought, if the applicant is able to prove her case. If she does not do so, then she will face the inevitable cost consequences.
I intend to make an order that the proposed second respondent be joined as a party to the proceedings and for the applicant to particularise her claim against the second respondent.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 13 May 2021
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