Janda & Janda (No 2)
[2022] FedCFamC1F 610
•23 August 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Janda & Janda (No 2) [2022] FedCFamC1F 610
File number(s): SYC 2295 of 2021 Judgment of: CHRISTIE J Date of judgment: 23 August 2022 Catchwords: FAMILY LAW – INTERLOCUTORY HEARING – PROPERTY – Anti-suit injunction –– Where the wife seeks to join a third party to the substantive proceedings – Where the third party has a claim against the husband for debt owed – Where the third party has commenced litigation in the Supreme Court of NSW – Where the wife asserts the husband and third party are depleting the asset pool – Where the Court must decide whether the anti-suit injunction is reasonably necessary – Accrued jurisdiction. Legislation: Cross-vesting Act 1987 (Cth) s 5,
Family Law Act 1975 (Cth) s 90AF,
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01 and 3.03
Cases cited: Ascot Investments v Harper [1981] 148 CLR 337; [1981] HCA 1,
Christie & Christie & Ors (2007) 37 Fam LR 181; [2007] FamCA 125,
Epstein and Epstein (1994) FLC 92 – 445; [1993] FamCA 119,
In the marriage of Waugh (2000) FLC 93-052; [2000] FamCA 1183,
Pratten & McPherson [2016] FamCA 775,
Re Wakim; Ex-parte McNally (1999) 198 CLR 511; [1999] HCA 27.
Division: Division 1 First Instance Number of paragraphs: 75 Date of hearing: 19 August 2022 Place: Sydney Counsel for the Applicant: Mr Deppeler Solicitor for the Applicant: Horowitz & Bilinsky Counsel for the First Respondent: Mr Kasep Solicitor for the First Respondent: Gordon & Barry Lawyers Counsel for the Fourth Respondent: Mr Foley Solicitor for the Fourth Respondent: Rockliffs Lawyers ORDERS
SYC 2295 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JANDA
Applicant
AND: MR JANDA
First Respondent
MR F JANDA
Fourth Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
23 AUGUST 2022
THE COURT ORDERS THAT:
1.Mr F Janda (“the fourth respondent”) be joined as a party to the proceeding.
2.Pending determination of these proceedings in the Federal Circuit and Family Court of Australia (Division 1), the fourth respondent is restrained from taking any further steps to prosecute his claim for relief in proceeding number … in the Supreme Court of NSW (“the Supreme Court proceedings”) other than to:
(a)Discontinue those proceedings; or
(b)Seek dismissal, adjournment or stay of those proceedings.
3.On or before 9 September 2022 Mr Janda (“the first respondent”) serve on Ms Janda (“the applicant”) and fourth respondent a Defence (and Cross-Claim if any) to the Statement of Claim filed by the fourth respondent in the Supreme Court proceedings
4.Within 14 days of the receipt of any Defence (and if applicable Cross-Claim) on behalf of the first respondent, the applicant file and serve points of claim setting out:
(a)Any relief sought against the fourth respondent and the factual basis for that relief;
(b)The grounds upon which the applicant maintains the first respondent has no liability to the fourth respondent under the Deed of Agreement dated 28 November 1998; and
(c)Any other grounds upon which the applicant maintains any liability under the Deed of Agreement dated 28 November 1998 should be wholly or partly disregarded in determining the appropriate order to make under s 79 of the Family Law Act 1995 (Cth) (“the Act”).
5.Within 28 days of the date of these orders the first respondent file and serve a points of claim setting out:
(a)Any relief sought against the fourth respondent and the factual basis for that relief; and
(b)Any grounds upon which the husband maintains he has no liability to the fourth respondent under the Deed of Agreement dated 28 November 1998.
6.Within 42 days of the date of these orders the fourth respondent file and serve a response to the wife’s points of claim and the husband’s points of claim.
THE COURT ORDERS BY CONSENT THAT:
7.Within 30 days the first and fourth respondent do all acts and things and sign all documents necessary so as to effect a sale of the property known as K Street, Suburb L in the State of NSW, being the land described in Auto Consol … (“the Suburb L property”) for the best price reasonably obtainable in the following manner:
(a)Listing the Suburb L property for sale by a method recommended by the real estate agent (unless otherwise agreed between the first and fourth respondent) with such agent as the first and fourth respondent may agree to appoint and in default of agreement within a further 14 days, with such agent the President of the Real Estate Institute of NSW shall appoint (“the agent”) the costs of and incidental to such appointment to be borne equally by the first and fourth respondent as and when same fall due;
(b)The price for the purpose of the sale of the Suburb L property shall be mutually agreed upon by the first and fourth respondent or, in the absence of agreement reached within 14 days, the price be the market value of the property as assessed by a jointly agreed upon registered real estate valuer or failing agreement within seven days by a representative of the President of the Real Estate Institute of NSW and the agent will be instructed of this reserve price by the husband and fourth respondent;
(c)In the event the bidding at any auction does not reach the reserve price, the husband and the fourth respondent may negotiate with the highest bidders or any other interested person and shall effect a sale of the Suburb L property at a price which is not more than 2.5 per cent below the reserve price;
(d)The first respondent and fourth respondent shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Allowing inspection of the Suburb L property at all reasonable times requested by the agent;
(iii)Ensuring the Suburb L property, including the grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers.
(e)The first and fourth respondent shall execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the first and fourth respondent or, in the absence of any agreement, at or above the price nominated pursuant to paragraph 2(b) hereof and any costs properly payable to the solicitor having conduct of the sale shall be a form part of the legal costs of sale and be deducted from the proceeds as herein provided;
(f)The first and fourth respondent shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within 14 days of the date of these orders, shall instruct such solicitor as may be appointed by the President for the time being of the Law Society of NSW (“the solicitor”) the costs of and incidental to such appointment to be borne equally by the first and fourth respondent as and when same fall due;
(g)Neither the first respondent nor the fourth respondent may confer with any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Suburb L property or to any commission; and
(h)Neither the first and fourth respondent will incur any costs in relation to the preparing the property for sale, including in respect of improvements, without the consent of the other respondent.
8.On settlement of the sale of the Suburb L property the proceeds of sale be paid in the following manner and priority:
(a)All costs and expenses of sale including legal costs and disbursements (incurred by the solicitor appointed under Order 7(f) above), agents’ commission and auction expenses and any monies expended on the property to prepare it for sale, whether by way of improvement or presentation for sale, and repayment to either of the parties of any expenses paid by them for legal costs and disbursements relating to the sale of the property, agents’ commission and auction expenses and improvements to the property;
(b)To the fourth respondent:
(i)One half of the net proceeds of sale; and
(ii)The sum of $150,000 in discharge of the principal owing under the loan made by the fourth respondent to the first respondent on or about 3 April 2020.
(c)The balance transferred to a controlled monies account held by Gordon & Barry Lawyers Pty Ltd on behalf of the first respondent, and held pending further order or agreement between the parties.
9.Mr G of G Associates Pty Ltd (“the valuer”) be appointed as a Court expert to value the applicant and first respondent’s interest in J Pty Ltd as at 30 June 2021 and within seven days of the date of these orders, the applicant and first respondent sign and send the joint letter of instructions to G Associates Pty Ltd in the terms set out in the draft letter of instructions annexed and marked “B” to the Response to Application in a Case filed on 10 August 2022 (“the Response”).
10.The first respondent cause to be provided to the valuer:
(a)A profit and loss statement and balance sheet for the financial years ended 30 June 2018 and 30 June 2021 together with the initial joint letter of instructions; and
(b)Any other information requested by the valuer.
11.Within seven days of the date of these orders the applicant select one of the three expert chattel valuers nominated by the first respondent in the letter from Gordon & Barry Lawyers to Horowitz & Bilinsky dated 24 May 2022 which chattel valuer shall be appointed as a court expert and the applicant complete, sign and return to the first respondent’s lawyer the joint letter of instruction in the terms set out in the draft joint letter of instructions annexed and marked “C” to the Response.
12.Upon completion of the valuation of the chattels, within 21 days the first respondent make available for collection the chattels which the parties have mutually agreed upon the applicant retaining.
13.The applicant and first respondent each pay:
(a)50 per cent of the costs of all court expenses appointed to undertake valuations in these proceedings; and
(b)Their respective share of any mediator.
14.The applicant and first respondent file an undertaking as to disclosure within 21 days.
15.The applicant’s Amended Application in a Proceeding filed 28 July 2022 be dismissed.
16.The parties attend for a conciliation conference on 7 November 2022 at 9.00 am.
17.The applicant be required to notify the second and third respondent of the conciliation conference date.
18.The matter be listed for final hearing on 13 February 2023 for five days.
19.The Court notes that the hearing will proceed on the basis that the dispute relating to the fourth respondent will be dealt with as a preliminary issue.
the court notes by consent that:
A.The applicant does not maintain in this proceeding that the Deed of Agreement dated 28 November 1998:
(a)Is fraudulent; or
(b)Was signed on a day other than 28 November 1998.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under Janda & Janda has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application by Ms Janda (“the wife”) seeking interim financial orders as against Mr Janda (“the husband”) and Mr F Janda (“the fourth respondent or “the husband’s brother””). The second and third respondent were excused from these interlocutory proceedings by a Judicial Registrar on 25 July 2022. The fourth respondent is the brother of the husband in the matrimonial cause. The Federal Circuit and Family Court of Australia (Division 1) (“this Court” or “the Court”) was originally being asked to determine a number of interlocutory issues but on the morning of the hearing, with the assistance of their legal representatives, the parties reached consent about most of the outstanding issues, leaving for determination the following:
(a)Whether or not the husband’s brother should be a party to these proceedings;
(b)Whether or not an anti-suit injunction should be granted to restrain the husband’s brother from proceeding with an application in the Supreme Court of New South Wales (“the Supreme Court”); and
(c)Whether the matter should be granted expedition.
background
The husband and wife commenced cohabitation in mid-1996.
In 1997 the mother of the husband and fourth respondent died and left a property (“the Suburb L property”) to the husband and his brother in equal shares.
On 28 November 1998 the husband and his brother, in their evidence, say they entered into a Deed of Agreement (“the Deed”), the essential terms of which were as follows:
(a)The husband could occupy the Suburb L property;
(b)The fourth respondent was entitled to be paid 50 per cent of the market rent for the Suburb L property;
(c)The husband agreed to pay all costs incurred as a result of living in and occupying the property; and
(d)Any loans raised to improve the property were agreed as between the husband and his brother to be repaid equally and set off against any rent.
Between 1999 and 2001 the husband says that he and the wife undertook work to the Suburb L property by way of renovation at a total cost of $110,000.
The wife says she was unaware of the existence of the Deed until after she and the husband separated.
In February of 2018 the husband and wife separated.
Since separation the husband and the wife have faced significant health issues, in particular the wife relies on evidence that she has an advanced illness. The wife seeks expedition of these proceedings which is not opposed.
On 9 July 2021 the lawyers acting for the wife wrote to the lawyers acting for the husband’s brother indicating that they challenged the indebtedness of the husband to his brother under the Deed and gave notice that the debt would be the subject of litigation as between the husband and wife.
On 31 March 2022 the wife filed an Initiating Application seeking both interim and final relief. The application did not seek orders as against the husband’s brother but the interim relief included an order for the husband to deliver the original Deed to the wife to enable it to be the subject of forensic examination.
On 9 June 2022 the fourth respondent filed a Statement of Claim in the Supreme Court seeking appointment of trustees to sell the Suburb L property and from the proceeds of sale, a distribution as follows:
(a)A payment of 50 per cent of the proceeds to him;
(b)A payment of 50 per cent of the proceeds to the husband less any amounts owing to the fourth respondent under the Deed;
(c)Repayment of a $150,000 loan from the husband’s brother to the husband;
(d)Interest on (b) and (c).
The evidence suggests that from the $150,000 paid by the husband’s brother to the husband, $144,082 was used to discharge a loan secured over the Suburb L property, leaving that property unencumbered. There is no evidence filed in the wife’s case to dispute this position.
On 28 July 2022 the wife filed an Amended Application in a Proceeding. That application sought orders which, if made, affected the husband’s brother including joinder and injunctions.
The Court is faced, on this application, with a competition between the wife, on the one hand who seeks that the third party be injuncted from continuing with proceedings in the Supreme Court, and the husband’s brother on the other who seeks that he be free to pursue that litigation to completion. The husband, through his counsel, indicated in his written submissions that he did not take a position on the merits of the application for an anti-suit injunction but requested that, should the Court grant the anti-suit injunction, it be on the basis that the husband and his brother be permitted to seek orders for dismissal, discontinuance or transfer. In oral submissions on behalf of the husband his counsel seemed to step back from the more neutral position adopted in writing in favour of the making of an anti-suit injunction.
The parties presented proposed consent orders relating to the outstanding issues of discovery, sale of the Suburb L property and appointment of experts.
The law
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) provide for joinder of parties.
Rule 3.01 says:
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
Rule 3.03 says:
(1) A party to a proceeding may include any person as a party by:
(a) naming the person as a party in the application, response or reply; and
(b) serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
(2) A party may add another party after a proceeding 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 referred to in paragraph (a); and
(iii) any other relevant document filed in the proceeding; and
(c) serve on the other parties:
(i) a copy of the application, amended application, response or amended response; and
(ii) the affidavit referred to in paragraph (a).
(4) A party may only add another party after the first court date with the leave of the court.
(5) A party who relies on subrule (4) must:
(a) file:
(i) an Application in a Proceeding; and
(ii) an affidavit setting out the facts relied on to support the addition of the proposed new party, including a statement of the proposed new party’s relationship (if any) to the other parties; and
(b) serve on the proposed new party:
(i) a copy of the Application in a Proceeding; and
(ii) the affidavit referred to in subparagraph (a)(ii); and
(iii) any other relevant document filed in the proceeding; and
(c) serve on the other parties:
(i) a copy of the Application in a Proceeding; and
(ii) the affidavit referred to in subparagraph (a)(ii).
The power to make an order or injunction binding upon a third party is not in question. Section 90AF(1) reads:
In proceedings under section 114, the court may:
(a) make an order restraining a person from repossessing property of a party to a marriage; or
(b) grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.
Section 90AF(2) provides:
In proceedings under section 114, the court may make any other order, or grant any other injunction that:
(a) directs a third party to do a thing in relation to the property of a party to the marriage; or
(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.
The Act contains safeguards to ensure that the interests of third parties are not overlooked when the power is exercised. Those are contained in ss 90AF(3) and (4) of the Act:
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b) if the order or injunction concerns a debt of a party to the marriage- it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d) for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e) for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b) the taxation effect (if any) of the order or injunction on the third party;
(c) the social security effect (if any) of the order or injunction on the parties to the marriage;
(d) the third party's administrative costs in relation to the order or injunction;
(e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
(f) the economic, legal or other capacity of the third party to comply with the order or injunction;
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
(h) any other matter that the court considers relevant.
I accept that it is a serious step to injunct a party from continuing litigation. All the more so where that person is a stranger to the marriage. It is a step which will only be taken where the Court can be satisfied that all the matters in s 90AF of the Act have been appropriately addressed.
As in Ascot Investments v Harper [1981] 148 CLR 337 the High Court of Australia (“the High Court”) noted at 354:
There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform. It is one thing to order a party to a marriage to do whatever is within his power to comply with an order of the court, even if what he does may have some effect on the position of third parties, but it is quite another to order third parties to do what they are not legally bound to do. If the sections had been intended to prejudice the interests of third parties in this way, it would have been necessary to consider their constitutional validity.
The introduction of s 90AF to the Act did not change that position. The scope of the power is wide and appropriately engaged where it is necessary to allow the conduct of a hearing in this Court: Christie & Christie & Ors (2007) 37 Fam LR 181.
Albeit that the injunction binds a party and not a court, it is also important to take into account the importance of judicial comity when seeking to injunct a party from proceedings before another judicial officer in a different jurisdiction.
consideration
It was plain to the husband, wife and the husband’s brother that, from about July 2021, there was a dispute between them concerning the indebtedness of the husband to his brother. The relevance of that dispute to the existing proceedings between husband and wife concerned how much of the equity in the Suburb L property would ultimately be considered as available for division between husband and wife.
The Suburb L property was the home of the husband and the wife. They lived there together between December 2001 and separation.
No party suggested (on the evidence before me) at this stage that the husband’s brother was not entitled to his half share in any proceeds of sale of the Suburb L property.
The dispute concerned the extent of the husband’s indebtedness arising out of the Deed.
On 31 March 2022 proceedings were filed in this Court.
On 8 June 2022 the husband’s brother filed a Statement of Claim in the Supreme Court.
The husband’s brother offered an undertaking not to deal with funds (other than half of the proceeds) without notice to the wife. It is not plain if the husband offered the same undertaking.
The wife did not respond to this offer.
Prima facie the husband’s brother is entitled to file a Statement of Claim in the jurisdiction of his choice and prosecute those proceedings to completion. It is not without good reason that an anti-suit injunction should issue. The husband’s brother argued before me that the wife, having failed to particularise the basis upon which she contended the liability between the brothers was illegitimate, she could not now be heard to complain if the husband’s brother brought proceedings in a court with clear jurisdiction to hear his claim.
As against that submission, the wife’s counsel said that the husband’s brother was given notice that the liability would be the subject of litigation in this Court and was invited to participate and declined.
In circumstances where two courts have jurisdiction it is necessary to weigh all of the available factors to determine whether:
(a)Both sets of litigation should continue simultaneously; or
(b)One forum should determine all issues.
No party sought transfer of the family law proceedings to the Supreme Court and accordingly, this Court offered the only opportunity for determination of all issues in one Court and one set of proceedings. This favours the application for anti-suit injunction.
The husband’s brother has made his claim reasonably clear. Attached to the Statement of Claim were schedules in respect of market rent, schedules in respect of rates and insurance and interest schedules. There was no schedule dealing with any offset for mortgage payments on loans taken out to effect improvements. To that extent it is not possible from the documents filed by the husband’s brother in the Supreme Court proceedings to determining the precise quantum for which he contends.
The husband has not filed a Defence in the Supreme Court proceedings.
The real risk which the continuation of the Supreme Court proceedings poses is that the wife, through the material filed in this Court, contends that there are matters which may be relevant to the disposition of those proceedings. The wife is not a party to those proceedings. I understand her evidence in this Court to suggest that:
(a)The Deed entered into between the husband and his brother was not known to her;
(b)She undertook work on the Suburb L property (at least potentially) increasing its value absent knowledge of the Deed or its terms; and
(c)To the extent that the husband and his brother argue that the Deed gave rise to a liability, the husband has failed to disclose that liability to third parties in circumstances where he would have been obliged to make such disclosure.
The husband for his part contends (in his sworn financial statement) that there is a liability to his brother for rent. The Deed provides for rent to be payable at “market” value.
The husband’s financial statement also refers to interest. It is not plain where the obligation to pay interest arises. The Deed is silent on the issue.
The Deed provides a set off for borrowings as against rent. All parties agree that there were borrowings. There may be a dispute about the extent of the borrowings, the extent to which they were applied to improvements and the extent of repayments. This is not yet apparent on the evidence.
Whether each of these tasks is the subject of evidence in one court or the other it seems inevitable that evidence will have to be led on the topic.
The wife through her material contends that the litigation in the Supreme Court is a vehicle to diminish the pool of assets available for division between her and the husband. I am not in a position to make a finding about that submission at this stage of the proceedings.
If the matter is heard and determined in this Court the husband, the wife and the husband’s brother will all give evidence. If the matter remains in the Supreme Court the wife is not a party to those proceedings and unless joined, will not be in a position to give evidence about matters which may impact upon interpretation of the Deed.
If this Court fails to grant the anti-suit injunction as sought, there will effectively be two sets of proceedings about the same subject matter namely the proper interpretation and application of the Deed.
I do not accept that the wife has failed to establish that an injunction is reasonably necessary. The cost to the parties of multiple litigation is one matter to be considered.
I accept the submission made on behalf of the husband’s brother that ideally he would not be involved in the proceedings between husband and wife which, because of their wider scope, have the capacity to be more expensive and productive of greater delay.
About delay – I was told from the bar table that the Supreme Court matter is listed for late 2022 and that the husband is to file his Defence on or before 9 September 2022. The husband’s counsel said that there was an order that the husband file any Defence or Cross-Claim on or before 9 September 2022. I was told by the husband’s counsel (who does not act for the husband in the Supreme Court proceedings) that the husband does intend to file a Cross-Claim. If that is the case then in the ordinary course the husband’s brother will be required to file a Defence. It is unfortunate that the husband did not place evidence before the Court concerning the position which he is taking in the Supreme Court proceedings. The sooner each of the parties identifies with precision the relief sought and the factual matters which ground the relief, the better the opportunity for resolution.
I am required to consider whether, should the Court find that the Deed is enforceable, the granting of an injunction will prejudice the rights of the husband’s brother to recover his debt. I am confident that, having regard to the equity in the property and the pool of assets for adjustment between the husband and wife, there is adequate money to meet any order which may be made in favour of the husband’s brother in due course.
The parties proposed orders require the sale proceeds be held in a controlled monies account and accordingly, the husband’s brother will have the protection of that order.
As indicated above, I was told that a Defence to the Statement of Claim in the Supreme Court was yet to be filed. I can infer from the contents of the husband’s financial statement filed 10 August 2022 that he accepts there is a debt owed to his brother. Without a Defence I am unable to form a view as to the scope of the dispute between them.
The husband says his brother is owed $545,200 plus interest. The statement also says “amount disputed”. It is not plain whether there is a dispute about calculation of the rent, a dispute about calculation of “set off” (if any) or, a dispute about calculation of or applicability of interest, or some combination of these.
I accept that the wife is in a position to give relevant evidence about the improvements to the Suburb L property (being the matrimonial home) and monies expended in respect of same.
I record that the wife appears to have made allegations about the authenticity of the Deed. I accept that the position of the husband’s brother that the wife has not provided any proper basis for challenge. As I understand the position at present, the wife now says that the Deed was executed by the husband and his brother at or about the time it is dated. As I understand her case she asserts that she was not aware of the existence of the document (or its terms) but this fact alone may have little bearing on its efficacy as between the brothers. Secondly, she contends that the husband has made representations which she interprets as an intention on his part to deplete the pool of assets available for division. I am not in a position to make findings about this issue which is denied by the husband.
However, absent allegations of fraud or recent invention, there remain contentious factual matters about the interpretation and application of the terms of the Deed and potential equitable claims which may arise depending upon the ultimate factual findings. Parts of the claim of the husband’s brother may face limitation issues. All of these issues remain to be determined.
The Statement of Claim filed by the husband’s brother plainly states his position. The husband and wife should be required to do likewise and in writing so each party knows the case which he or she is obliged to answer.
The husband’s brother resists joinder on the basis that the wife has yet to identify the specific relief sought against him. That is an understandable position. It should be remembered that there are two bases upon which the Court may join a third party – the first is where there is specific relief sought against that third party and the second is where their interests are directly affected. As I understand the wife’s position she says that she did not know that the Deed existed. Now that she accepts it exists, her counsel suggests that she also accepts there may be an amount which is owed to the husband’s brother pursuant to the terms of the Deed. If this Court were to determine the dispute about the liability to the husband’s brother in a manner which allocates funds from the sale of the Suburb L property to the wife, such that they were unavailable to the husband to meet his debt to his brother, then the husband’s brother would be affected by an order of this Court.
If this Court hears both disputes then there is only one set of proceedings. As previously discussed, the wife is not a party to the Supreme Court litigation. Until the husband indicates his Defence, it would be difficult for her to know whether her interests are other than theoretically affected by the manner in which that litigation will be conducted by the plaintiff and defendant in the Supreme Court.
The interpretation and applicability of the Deed is a discrete issue in the wider scheme of the dispute between husband and wife (and the existing third parties, the wife’s daughter and son-in-law, the second and third respondents).
Counsel who appeared on behalf of the husband’s brother submitted that the application for joinder was premature. I understand that as between the husband’s brother and the wife, that may be the case but when one considers that the husband has not made his position in respect of that litigation plain to either the wife or his own brother, then the wife’s actions seem designed to ensure that her interests are protected.
The position taken by the husband’s brother, not unreasonably, was that this was a discrete issue and may be dealt with more expeditiously, with less delay and in a shorter time frame with fewer legal fees, if it remained in the Supreme Court.
The wife has sought expedition of the final hearing in this Court in reliance upon her ill health. The evidence filed by the wife to support this application includes a report by an oncologist Dr H. The wife’s prognosis in that report is such that the Court would need little convincing to allocate prompt hearing dates. No party opposed expedition and I intend to grant the application and allocate hearing dates. I intend to direct the parties to attend mediation with a view to resolving the matter.
Because I am able to give the parties a hearing date in February 2023, the difference between when the discrete matter may be dealt with in the Supreme Court and finalisation in this Court is less acute than might otherwise be the case. The husband’s counsel foreshadowed a Cross-Claim. If filed, a Cross-Claim would likely extend the timetable in the Supreme Court and make any argument based on delay less convincing.
Because I accept that the issue as between the brothers is discrete – albeit an issue about which both husband and wife would potentially give relevant evidence - I intend to make directions which would have the effect of dealing with this issue as a preliminary issue so as to release the husband’s brother from the balance of the hearing.
I find that determination of this issue is reasonably necessary to do justice and equity as between the husband and wife as it will impact on the size of the pool of assets available for distribution as between them. I find that that the joinder of the husband’s brother is necessary as any decision which I make about the interpretation of the Deed may have a direct impact on his interests.
The husband submitted that the wife had failed to demonstrate the necessity to grant the injunction because she was not able to demonstrate a risk of dissipation of assets or risk that absent an injunction her claim may be in jeopardy. The test for invoking the injunctive power is the requirement that the applicant demonstrate that the injunction is necessary to prevent abuse or frustration of the Court’s process: In the marriage of Waugh (2000) FLC 93-052. The husband’s failure to make his position plain has raised a concern that absent injunction, the husband and his brother could enter into an agreement, the effect of which may be to impact the wife’s claim in this Court.
The above observations are made without the benefit of the husband’s Defence or indeed any outline of his position as regards his brother’s claim. In due course it may be evident that there are sufficient assets available to this Court without the injunction issuing but at this interlocutory stage that conclusion is unavailable.
In the proposed minute of consent orders the parties asked for orders that:
Pending determination of this proceeding in the Federal Circuit and Family Court of Australia, the fourth respondent is restrained from taking any further steps to prosecute his claim for relief in proceeding number [2022/…] in the Supreme Court of New South Wales other than to:
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(c) seek an order from the Supreme Court of New South Wales for transfer of those proceedings to this Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987.
At the hearing I indicated to counsel that I was of the view that I could not make the order as drafted because, while between July 1988 when the Cross-vesting Act 1987 (Cth) (“the Cross-vesting Act”) came into force and 1999 when the High Court handed down its decision in Re Wakim; Ex-parte McNally (1999) 198 CLR 511 (“Re Wakim”) it was routine for the then Family Court of Australia to exercise cross-vested jurisdiction to make orders in matters which had been filed in state Supreme courts, the position changed in 1999. Re Wakim held unconstitutional that part of the scheme which provided for the cross-vesting of state jurisdiction to federal courts. Accordingly, since the decision in Re Wakim the accrued jurisdiction of this Court has achieved greater attention and provided, in appropriate cases, for matters which fall within the accrued jurisdiction of the Court to be determined notwithstanding that they might arise from proceedings filed in a state court.
Counsel for the husband indicated that that relief had been based upon the orders in a matter called Pratten & McPherson [2016] FamCA 775 (“Pratten”) per Austin J. The facts in Pratten were analogous insofar as there were contemporaneous proceedings before both the Supreme Court and the Family Court of Australia. In that case the third party had been joined to the family law proceedings at the time at which she filed a separate proceeding in the Supreme Court seeking relief under s 66G of the Conveyancing Act 1999 (NSW). The third party in that case sought an order transferring the whole of the family law proceedings to the Supreme Court pursuant to s 5(4) of the Cross-vesting Act. This Court has the power to grant such an application and the Supreme Court has the power to accept the jurisdiction of this Court pursuant to the Cross-vesting Act.
His Honour’s reasoning in the case and determination that the entirety of the dispute be heard by the Family Court of Australia is arguably correct. It is plain from the reasons that his Honour understood that state proceedings could not be transferred under the Cross-vesting Act. As it transpires, given that there is no real dispute about the power of this Court to hear the matter pursuant to its accrued jurisdiction, I will delete proposed Order 2(c) without prejudice to the parties’ rights to seek identical relief in this Court.
I have also required the husband to serve his Defence before the wife particularises her claim. It is proper that he do so. It allows each party to use this information to prepare and present their respective cases and understand the case against them. It also allows the Court to properly understand the substantive issues in the proceedings: Epstein and Epstein (1994) FLC 92 - 445.
The procedural directions to be made address the wife’s application for expedition and together with the parties’ consent orders should have the effect of ensuring that the expert evidence is available ahead of the mediation event to give all parties the best opportunity to resolve the case without hearing. In the event that they are unable to do so the matter has been listed for hearing.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 23 August 2022
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