Jong and Yeng and Ors
[2010] FamCA 572
•9 JULY 2010
FAMILY COURT OF AUSTRALIA
| JONG & YENG AND ORS | [2010] FamCA 572 |
| FAMILY LAW– PRACTICE AND PROCEDURE – Summary dismissal |
| Family Law Act 1975 (Cth) |
| Aldred -v- Aldred; Westpac Banking Corporation (1986) FLC 91-753 Luadaka & Luadaka [1998] FamCA 1520; (1998) 24 Fam LR 340 |
| APPLICANT WIFE: | Ms Jong |
| 1st RESPONDENT HUSBAND: | Mr Yeng |
| 2nd RESPONDENT: | W Holdings Pty Ltd |
| 3rd RESPONDENT: | K Enterprises Pty Ltd |
| 4th RESPONDENT: | HS Jong |
| FILE NUMBER: | SYC | 3007 | of | 2008 |
| DATE DELIVERED: | 9 JULY 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | JUDICIAL REGISTRAR LOUGHNAN |
| HEARING DATE: | 25 JUNE 2010 |
REPRESENTATION:
| SOLICITOR FOR THE APPLICANT WIFE: | James Lee Solicitors (Excused attendance) |
| COUNSEL FOR THE 1ST RESPONDENT HUSBAND: | Mr Cohen |
| SOLICITOR FOR THE 1ST RESPONDENT HUSBAND: | Cambridge Solicitors |
| COUNSEL FOR THE 2ND, 3RD AND 4TH RESPONDENTS: | Mr P Campton |
| SOLICITOR FOR THE 2ND, 3RD AND 4TH RESPONDENTS: | Benjamin & Robinson |
Orders
Insofar as it seeks orders in terms of paragraphs 2, 3, 4, 7, 8, 9, 12, 13 & 14, the Further Application in a Case of 2nd, 3rd and 4th Respondents filed 26 February 2010 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Jong & Yeng and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3007 of 2998
| MS JONG |
Applicant
And
| MR JENG |
First Respondent
| W HOLDINGS PTY LTD |
Second Respondent
| K ENTERPRISES PTY LTD |
Third Respondent
| HS JONG |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
In the context of property settlement proceedings between wife and husband, the husband seeks orders against strangers to the marriage. Three of those strangers seek that his claim be summarily dismissed or permanently stayed or that he provide security for costs.
The wife did not wish to be heard in relation to these interlocutory proceedings and was excused.
Applications
W Holdings Pty Ltd, L Enterprises Pty Ltd and HS Jong seek orders in accordance with the Further Application in a Case of 2nd, 3rd and 4th respondents filed 26 February 2010. The relevant orders sought are as follows:
2.That the response of the husband filed 7 October 2009 insofar as it relates to the Second Respondent be dismissed.
3.That in the alternative, the proceedings insofar as they relate to the Second Respondent be permanently stayed.
4.That in the alternative, the Husband pay by way of security for costs into the Trust Account of Benjamin & Robinson as solicitors for the Second Respondent, pending determination of the Husband’s Response filed 7 October 2009, the sum of $50,000.
5.That the Husband pay the Second Respondent’s costs of these proceedings on an indemnity basis.
….
7.That the response of the husband filed 7 October 2009 insofar as it relates to the Third Respondent be dismissed.
8.That in the alternative, the proceedings insofar as they relate to the Third Respondent be permanently stayed.
9.That in the alternative, the Husband pay by way of security for costs into the Trust Account of Benjamin & Robinson as solicitors for the Third Respondent, pending determination of the Husband’s Response filed 7 October 2009, the sum of $50,000.
10.That the Husband pay the Third Respondent’s costs of these proceedings on an indemnity basis.
….
12.That the response of the husband filed 7 October 2009 insofar as it relates to the Fourth Respondent be dismissed.
13.That in the alternative, the proceedings insofar as they relate to the Fourth Respondent be permanently stayed.
14.That in the alternative, the Husband pay by way of security for costs into the Trust Account of Benjamin & Robinson as solicitors for the Fourth Respondent, pending determination of the Husband’s Response filed 7 October 2009, the sum of $50,000.
15.That the Husband pay the Fourth Respondent’s costs of these proceedings on an indemnity basis.
The husband opposes those orders.
Documents relied on
The applicants, who are the 2nd, 3rd and 4th respondents in the substantive proceedings, rely on:
Further Application in a Case of 2nd, 3rd and 4th respondents filed 26 February 2010
Affidavit of Susan Robinson sworn 25 February 2010 and filed 26 February 2010
Affidavit of Susan Robinson sworn 26 May 2010 and filed 27 May 2010
Orders of Registrar Crawford made 13 November 2009, 9 March 2010 (sic) and 7 May 2010.
The husband relies on:
Affidavit of husband sworn 13 October 2010 and filed 14 October 2010
Affidavit of husband sworn 5 May 2010 and filed 6 May 2010
Affidavit of Manon Wong sworn 22 January 2010
Amended Points of Claim filed 18 June 2010
Short history
The wife is 48 years of age and the husband is 61. They met in 1978, were married in 1982 and were divorced on 1 September 2008.
Children
The husband and wife have four children:
J is 24 years of age and lives with the wife;
J is 20 years of age and lives independently;
P is 18 years of age and lives with the wife; and
L is 16 years of age and lives with the wife.
Background facts
The second respondent is W Holdings Pty Ltd. The shares in W Holdings Pty Ltd are effectively held by the wife’s parents. The directors are the wife’s father, HS Jong and brother, S Jong.
The third respondent is K Enterprises Pty Ltd. The shareholders and directors are the wife’s brother, A Jong and his wife.
The fourth respondent is HS Jong who is the wife’s father.
Albeit not directly involved in these proceedings, the fifth respondent is B Company (deregistered). The shares in B Pty Ltd are wholly owned by the husband and the wife. The husband and the wife are the directors of that entity. That entity was deregistered after Strike Off proceedings in January 2008. It is yet to regain registration.
On 28 April 2009 the wife commenced proceedings for settlement of property.
On 7 October 2009 the husband filed his Response. He sought orders against W Holdings Pty Ltd, K Enterprises Pty Ltd, HS Jong and B Company (deregistered).
On 11 November 2009 the 2nd, 3rd and 4th respondents filed a Reply in which they sought:
1.That the Orders sought by the Respondent husband by way of Response filed 7 October 2009 be dismissed.
2.That Respondents 2, 3 and 4 be removed from the proceedings.
3.That the Respondent Husband pay the costs of Respondent 1, 2, 3 and 4 in these proceedings.
On 26 February 2010 the 2nd, 3rd and 4th Respondents filed a Further Amended Application in a Case seeking that the husband’s claims against them be:
a) summarily dismissed; or
b) permanently stayed; or
c) that the husband provide security for their costs.
For the purposes of the husband’s claims against the third parties, the following are the assumed facts[1]:
[1] From the husband’s Amended Points of Claim dated 18 June 2010
i.The second respondent carries on the business of construction and property investment.
ii.The fourth respondent is the director and proprietor of the second respondent. The fourth respondent is also the father of the applicant.
iii.In 1992 or thereabouts it was agreed that the first respondent would work with the second respondent in the business of investing, developing, constructing property, "the business".
iv.A partnership was entered into between the first respondent and the second respondent as well as the [S Jong], the fourth respondent's son and director of the third respondent. It was agreed by all parties that the second respondent would receive 40% of the profits made from the business and the first respondent and [S Jong] would each receive 30% of the business' profits.
v.The first respondent's role was to work as on site construction manager and would supervise and manage all aspects of construction.
vi.In the alternative it was agreed between the first respondent and the second respondent that the first respondent would receive 30% of all profits made by the second respondent instead of a wage.
vii.The agreement were negotiated and entered into between the first and second respondent through the second respondent's proprietor and director, the fourth respondent.
viii.In accordance with the agreement, the first respondent did work for the second respondent from the period of 1992 to around 2006 or thereabouts on a full time basis.
ix.In breach of the agreement, the second respondent has not paid to the first respondent it's entitlement due under the agreement or allowed the first respondent to its rightful share of the profits.
x.It was subsequently agreed by the first, second and fourth respondent that any profits due to the first respondent under the agreement would be invested in property by the second respondent.
xi.In the premises, the first respondents share thereof was and is held on trust by the second, (and third) and/or fourth respondent. Particulars will provided after discovery upon inspection.
xii.The second respondent has invested profits of the business into various properties. Particulars including particulars of quantum will be provided after discovery upon inspection.
xiii.The second and fourth respondents have refused or declined to provide an accounting to the first respondent of both the said profits thereof and the dealings with the said trust property.
THE [D] PROPERTY/SECOND PARTNERSHIP OR JOINT VENTURE AGREEMENT
xiv.The second respondent entered into an agreement with the fifth respondent, a company owned jointly by the applicant and the first respondent in which the fifth respondent would contribute $175,000 being half of the purchase price into the purchase of two houses at [D]. "the [D] property".
xv.In accordance with that agreement the fifth respondent has contributed $175,000 towards the purchase price of the [D] property.
xvi.It was a term and condition that the [D] property would be developed into five townhouses and then either sold or rented out.
xviiIt was a term and condition of the agreement that in the event that the developed property was either sold or rented, the fifth respondent would be entitled to 50% of the profit.
xviii.The said development was subsequently completed. Thereafter the second respondent sold four of the units and retained one of the units over which it granted leases from time to time receiving rent.
xix.In breach of the said agreement the second respondent did not pay to the fifth respondent its share of the profits of the development of the [D] property nor has it rendered any accounting.
xx.In the premises the second respondent holds the remaining unit at [Unit 4, D] on trust for the fifth respondent
xxi.In the premises the proceeds and profits from the sales of the first four units of the [D] are held on trust for the benefit of the fifth respondent to the extent of the contribution to the proceeds and profits by the fifth respondent.
xxii. Further, the second respondent has used proceeds of the sale of the first four units of the [D] property after subdivision and invested the money into [C] "the [C] Properties"
xxiii.In the premises, the Second Respondent holds its portion of the [C] properties on trust for of the fifth respondent and itself in equal shares.
THIRD RESPONDENT
xxiv.The proceeds of the sale of the first four units of [D] property have been used to acquire the [C] property.
xxv.The third respondent has acquired a legal interest in the property despite not contributing towards the purchase price of the property.
xxvi.In the premises the third respondent holds its legal title of the [C] property on trust for the fifth respondent.
FOURTH RESPONDENT
xxvii. As against the fourth respondent and in the alternative, the first respondent asserts that the fourth respondent has individually represented and promised the following to the respondent:
a.That the first respondent work for the fourth defendant's business of investing, developing and constructing property through the second respondent.
b.in return for the first respondent so working for the fourth respondent the first respondent would receive 30% of all profit made by the fourth respondent.
c.In addition, if profits due to the first respondent were invested in property, the first respondent would obtain a beneficial interest in such property in proportion to the investment of the said funds.
xxviii. The first respondent relied upon fourth respondent promise and representation and acted on the basis of the representation and promise by the fourth respondent by doing work for the fourth respondent and/ or for the second respondent.
xxix.Since 2006 when the marriage of the applicant and the first respondent broke down the fourth respondent has repudiated this by denying that he is obliged to perform under the said agreement and not giving the first respondent a share of the profits, or an interest in property nor providing an accounting to the first respondent.
xxxi.By reason of the said action and repudiation of the fourth respondent of his promise the first respondent has suffered loss and damage. Particulars of loss of the benefits of the said profits and the said investment will be provided upon inspection of discoverable documents.
Written Submissions
The written submissions on behalf of the 2nd, 3rd and 4th respondents are:
CASE OUTLINE DOCUMENT FILED ON BEHALF OF THE 2ND, 3RD AND 4TH RESPONDENTS
1.NATURE OF PROCEEDINGS
The substantive proceedings between the husband and the wife are as to property settlement.
The 2nd, 3rd and 4th respondents were joined to the proceedings by way of relief sought by the husband in his Response.
The relief sought by the 2nd, 3rd and 4th respondents as against the husband is for summary dismissal, in the alternative a permanent stay or in the further alternative, security for costs.
2(a)SUBSTANTIVE RELIEF
No. Document Sworn Filed
1.
Application of wife
28.04.2009
2.
Response of husband
07.10.2009
3.
Reply of 2nd, 3rd and 4th respondents
11.11.2009
APPLICATION LISTED FOR HEARING
5.
Further Application in a Case of 2nd, 3rd and 4th respondents
26.02.2010
As to
The 2nd respondent - paragraphs 2, 3, 4 and 5.
As to
The 3rd respondent – paragraphs 7, 8, 9 and 10.
As to
The 4th respondent – paragraphs 12, 13, 14 and 15.
2(b)DOCUMENTS RELIED UPON BY THE 2ND, 3RD AND 4TH RESPONDENTS
No. Document Sworn Filed/Made
1.
Orders and Directions made by Registrar Crawford
13.11.2009
2.
Orders made by Registrar Crawford
09.03.2010
3.
Orders made by Registrar Crawford
07.05.2010
4.
Affidavit of Susan Robinson
25.02.2010
26.02.2010
5.
Affidavit of Susan Robinson
26.05.2010
27.05.2010
Documents served upon 2nd, 3rd and 4th respondents by the husband.
6.
Affidavit of husband
13.10.2009
14.10.2009
7.
Affidavit of Manon Wong, Solicitor
22.01.2010
8.
Affidavit of husband
05.05.2010
06.05.2010
9.
Document entitled, ‘Points of Claim” filed on behalf of husband purporting to comply with the Orders and Directions made 09.03.2010
06.05.2010
The 2nd, 3rd and 4th respondents have not been served with a Financial Statement by the husband
GENERAL
1.
The shareholdings in [W] Holdings Pty Ltd are wholly owned and controlled by the wife’s parents. The Directors are the wife’s father (the 4th respondent in the proceedings) and the wife’s brother, [A Jong].
2.
The shareholdings in [K Enterprises] Pty Limited are wholly owned by the wife’s brother, [A Jong] and his wife, [Mrs A Jong]. They are the Directors of that entity.
3.
The 4th respondent is the wife’s father.
4.
The shares in [B] Pty Ltd are wholly owned by the husband and the wife. The husband and the wife are the Directors of that entity. That entity was deregistered pursuant to Strike Off proceedings on […] January 2008. It is yet to regain registration.
3.PRINCIPALS AND JURISDICTION
Summary Dismissal
1. The relevant test for summary dismissal has been described in numerous Authorities[2] and was, of recent times, revisited by Finn J sitting as a Trial Judge[3].
[2]See Aldred -v- Aldred; Westpac Banking Corporation (1986) FLC91-753 as per Nygh J at pg 75,492 adopting Barwick C J in General Steel Industries -v- Commissioner of Railways (NSW) (1964) 112 CLR125.
[3] Custodio -v- Pinto & Ors (2006) FLC93-279 at pgs 89,759 to 89,761 at para 6-11.
2. In distilling the principals referred to, it is necessary for the plaintiff’s case to be so clearly untenable that it could not possibly succeed before it would be summarily dismissed.
3. The Authorities set out that:-
(a)consideration is given to the material put forward by the respondent to the Application for summary dismissal (in this case the husband), and
(b)at its highest, the material to which the applicant for summary dismissal could rely as restricted to relevant non-contentious facts.
4. Rule 10.12 of the Family Law Rules clarifies the power of the Court to make summary orders. Rule 10.14 sets out the powers (not exclusively) that the Court may exercise under that part.
5. Putting the principals in their simplest terms, if the husband’s evidence is accepted, and his case is taken at its highest, he cannot establish the basis for the relief sought, then the application should be summarily dismissed
Permanent Stay
1. The principals for relief in relation to permanent stay are different to those for a summary dismissal[4]. A permanent stay is ordered to prevent a substantial injustice arising out of what must have been seen as an abuse of process in allowing proceedings to continue.
2. The critical factor in the exercise of discretion in ordering a permanent stay is the conduct of the parties seeking substantive relief.
3. Consideration of the merits of the plaintiff’s claim are probative. McHugh J provided useful guidance in how discretion is to be exercised in determining such an application – that is, the commencement or continuance of proceedings creates injustice or unfairness to one of the parties.
4. Consideration as to he impact of limitation periods may also be relevant.
5.French J in Bomanite -v- Slatex[5] said:-
“None compensatable inconvenience and stress on individuals are significant elements of modern litigation. Costs recovered even on an indemnity basis will not compensate for time lost…”
[4] Brisbane South Regional Health Authority -v- Taylor (1996) 186 CLR541 at pg. 552.
[5] (1991) 105 ALR165 at 177.45 – albeit in a different context
Security for Costs
1.The overriding purpose of an Order for security for costs is to ensure that an unsuccessful party does not occasion an injustice to the other by way of the proceedings.[6] The provisions of Rule 19.05 are also applicable.
[6] In the marriage of Luadaka (1998) FLC 92-830
2.These circumstances in this matter are relevant to the discretion to make an order for security for costs:
· the means of the husband to satisfy an order for costs if he is unsuccessful
· the prospects of success of the application
· the bona fides of the claim
· whether the order for security would be oppressive or stifle the litigation
· the difficulties of enforcing an order for costs at the conclusion of the litigation
· the quantum of costs likely to be incurred – the evidence promotes well over $100,000. The quantum sought is $150,000
4.THE CASE PROMOTED BY THE HUSBAND AGAINST THE 2ND, 3RD AND 4TH RESPONDENTS AND THE DIRECTIONS MADE BY THE COURT TO DATE
1. As a matter of fairness, the husband has been both prompted, and thereafter required and ordered, by the Court to provide a clear foundation as to the law relied upon, and the facts contended in bringing the 2nd, 3rd and 4th respondents - as third parties to the marriage - into the current proceedings.
2. It is submitted that the husband, to date, has not articulated his case.
3. On 13 November 2009, Registrar Crawford directed the husband to file material as to “why the 2nd, 3rd, 4th and 5th respondents ought not be removed from the proceedings’.
4. Husband filed an Affidavit. The admissible and discernable portions of the affidavit are difficult to distil.
5. The 2nd, 3rd and 4th respondents thereafter challenged both the competency of the husband to bring the claims contained in his Response concerning them, and the validity of those claims if they could be distilled.
6. By Orders made on 9 March 2010, the husband was ordered to provide, ‘particulars by Points of Claim” by setting every head of relief sought against each of the respondents including the facts grounding that relief, the quantum claimed and the facts grounding the quantum.
7. The purpose of the Order was plain having regard to the history of the litigation by the husband relating to the 3rd parties to the marriage. The husband, as a plaintiff, was required to furnish a statement of the claim made with sufficiently clarity to allow the 2nd – 4th Respondents a fair opportunity to meet it.
8. The object of orders of the learned Registrar were to define the issues of the litigation. Any relief that the court could grant must be grounded in the pleadings and/or the case promoted by the husband[7].
[7]See Dare -v- Pulham (1982) 148 CLR 659, Le Poer Trench J falling into error as identified by the Full Court – Gilchrist (2009) FLC 93-416.
9. The orders were made in the shadow of the current application for summary relief. These matters being attended to, the respondents contend that the claim of the husband is untenable.
10. Upon the matter coming before Registrar Crawford on 7 May 2010 the husband, by way of his Counsel, confirmed that his Points of Claim filed on 6 May 2010 was the document that the husband would rely upon in relation to the Application presently being determined by the Court save and except as to evidence concerning the Security for Costs Application.
11. With respect, the Affidavit evidence relied upon and the Points of Claim are confusing and in large part unintelligible.
12. The husband purports to anchor the jurisdiction of the unidentified and unquantified claim in the accrued jurisdiction of the Court. The Full Court in Warby[8] said that an accrued jurisdiction existed to determine “a litigious and justiciable controversy under State law or pursuant to a common law claim between a party to the marriage and a third party of which the Family Law claim forms part” .
13. Without considering any matter of discretion as to whether the Court should exercise any accrued jurisdiction, it is fundamental to the power of the Court to even consider entertaining the claim of the husband that they form part of a single justiciable controversy. The Full Court referred to the existence of a common sub stratum of facts. In other words, the issue to be determined must be so bound up with the dispute between the parties to the marriage that one could almost not determine the family law dispute without determining the third party dispute.
14. The husband in this matter has failed to engage the contended source of jurisdiction by reference to his evidence and points of claim at any level, let alone to a prima facie position.
15. That point must be achieved to avoid summary determination. It is not achieved.
16. Additionally, the husband has failed to identify the fact or circumstance that engages the discretion to exercise jurisdiction. The husband was required to articulate his case. That requirement exists at law and by way of order of the Court. The requirement “to account” for “contributions” and to “repay” monies “owing pursuant to each and every agreement” is both incoherent and makes no sense.
17. The requirements of the orders made 9th March 2010 have been significantly ignored. It is submitted that the failures by the husband to comply with the orders even in a cursory fashion is perhaps a window into his own capacity to assess the merits of his contended claim - if it can ever be identified and particularized. The husband concedes that, whatever the claim is, it is not able to be quantified.
18. The injustice and unfairness to the 2nd - 4th respondents is both patent and obvious.
19. The claim appears to commence from 1992. It may canvass an unspecified number - potentially thousands – of circumstances, conversations, actions and transactions. It is unknown if the claim has any documentary foundation. Delay and Limitation periods may be significant, as may be equitable defences. How are the respondents to know?
[8] (2002) FLC 93-091
The written submissions on behalf of the first respondent are:
PRINCIPLE RELATING TO SUMMARY DISMISSAL
1.The rules s 10.12 contain the basis for an application for summary dismissal.
2.The Amended Points of Claim clearly sets out causes of action (as does the original points of claim.
3.At present no orders have been made for the filing of substantive evidence in relation to the First Respondent’s claim against the Second, Third and Fourth Respondents.
4.Hence the only relevant issue is whether the Amended Points of Claim disclose any causes of action. As this is the case, it cannot be said the proceedings commenced by the First Respondent’s against the second third and fourth respondent fall within the ambit of r 10.12.
5.It is abundantly clear that the court has accrued jurisdiction to deal with the factual and legal matters referred to in the Points of Claim. See Warby v Warby (2001) FAMCA1469.
6.The First Respondent's claim against the Second, Third and Fourth respondents is closely related to the disputes between the applicant and the first respondent.
7.The factual disputes between all parties are not severable. It would be convenient for one court to deal with one matter.
8.As the facts are non-severable and intrinsically linked to the main dispute, they fall within the Family Court accrued jurisdiction.
PERMANENT STAY
9.There is no basis for a permanent stay and the First Respondent has not been provided with reason for the application by the basis of the Second, Third and Fourth Respondent’s application therefore it cannot make in submissions other than stating that there is no basis for the application.
SECURITY FOR COSTS
10.No evidence has been filed by the Second, Third and Fourth Respondent other than merely stating the costs of running the matter. This is not sufficient to merit the granting of an application. The Points of Claim on it’s certainly provides no basis for an application.
11.Rule 19.05 provides the basis for such application and there is no evidence to support the factors referred to in the application.
12.Furthermore, there are enough assets between the Respondent Husband and Applicant Wife to satisfy the cost order sought by the Second, Third and Fourth Respondent.
The Approach to an Application for Summary Dismissal
Although the Family Law Rules 2004 make provision for summary orders, the Rules are not the source of power to make an order for summary dismissal. The Court has inherent power to control proceedings before it, including the power of summary dismissal. The Rules relevantly provide:
RULE 10.12
Application for summary orders
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a) the court has no jurisdiction;
(b) the other party has no legal capacity to apply for the orders sought;
(c) it is frivolous, vexatious or an abuse of process; or
(d) there is no reasonable likelihood of success.
….
RULE 10.14
What the court may order under this Part
On an application under this Part, the court may:
(a) dismiss any part of the case;
(b) decide an issue;
(c) make a final order on any issue;
(d) order a hearing about an issue or fact; or
(e) with the consent of the parties, order arbitration about the case or part of the case.
Note This list does not limit the powers of the court. The court may make orders on an application, or on its own initiative (see rule 1.10).
As to the principles to be applied in dealing with an application for Summary Dismissal, I was referred to Custodio & Pinto and Ors / IC & WP and Ors[2006] FamCA 941; (2006) FLC 93-279. There Finn J said:
Principles relevant to an application for summary dismissal
6. It was common ground before me that the principles which govern an application for summary relief are as stated by Kirby J in Lindon v The Commonwealth (no 2) (1996) 70 ALJR 541 at 544-5:
The approach to be taken by the Court to [an] application for summary relief is not in doubt:
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; [General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128f; Dyson v Attorney-General [1911] 1 KB 410 at 418.]
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 [Munnings v Australian Government Solicitor (1994) 68 ALJR 196 at 171f, per Dawson J] or in advancing a claim that is clearly frivolous or vexatious; [Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.]
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 termination. [Coe v The Commonwealth (1979) 53 ALJR 403; Wickstead v Browne (1992) 30 NSWLR at 5-7.] 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 a demurrer. [Coe v The Commonwealth (1979) 53 ALJR 403 at 409.] 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. [Church of Scientology v Woodward (1980) 154 CLR 25 at 79.] A question has arisen as to whether O 26, r 18 applies to part of a pleading. [Northern Land Council v The Commonwealth (1986) 161 CLR 1 at 8.]… ; 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.
7.See also the decisions of the Full Court of this Court in Bigg v Suzi (1998) FLC 92-799 paragraphs 5.1 to 5.10; Ferrall and McTaggart v Blyton (2000) FLC 93-054 paragraphs 95 – 98; Pelerman v Pelerman (2000) FLC 93-037; and Beck v Beck (2004) FLC 93-181 paragraphs 17 – 18.
8.The authorities also establish that there are limitations on the material upon which an applicant for summary dismissal can rely in establishing the case for such relief. As Kirby J said in Lindon (supra) that in order to secure relief by way of summary dismissal, “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” (at 544-5).
9.In Beck (supra) the Full Court cited a passage from the joint judgment of Mason CJ, Dean and Dawson JJ in Webster v Lampard (1993) 177 CLR 598 at 608 concerning the power to summarily dismiss which concluded with the following:
As has been said, it was incumbent on the Master, in the absence of any opportunity of cross-examination, to dispose of the case on the basis that the [respondent’s] version of the facts, which was not inherently incredible, would ultimately be accepted on the trial of the action.
10.Having cited this passage, the Full Court in Beck continued (at paragraphs 20–21):
20.Further support for the proposition that an application for summary dismissal must be determined on the basis only of the material put forward by the respondent (to that application) is to be found in the passage from the judgment of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-5 (which was quoted by the Full Court in its judgment in Bigg v Suzi) where his Honour said:
“…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 (Munnings v Australian Government Solicitor (1994) 68 ALJR 196 at 171f, per Dawson J) or in advancing a claim that is clearly frivolous or vexatious; (Dey v VictorianRailways Commissioners (1949) 78 CLR 62 at 91.)”
21.Regard should also be had to paragraph 6.31 of the judgment in Bigg v Suzi where the Full Court referred to the fact that the wife, who was the applicant for the summary dismissal of a s 79A application by the husband, “had no right to adduce any evidence at that summary hearing to contradict the evidence of the husband or to seek to contradict any inference which it might be submitted should be drawn from that evidence.”
11.In the recent decision in Bain Pacific Associations LLC, BCIP Associates II-B and Pacific Equity Partners (NZ) Limited, and others and Kelly [2006] FamCA 518, having referred to what was said in paragraphs 21 of the judgment in Beck (supra), the Full Court of this Court accepted the proposition:
21.… that apart from material in the case of the respondent to an application for summary dismissal, the court may have regard to relevant non-contentious facts, even if raised by the applicant for summary dismissal.
Therefore the task is to examine the husband’s documents and if he lacks a reasonable cause of action, to dismiss his claims. The enquiry focuses on the husband’s case.
The exercise of discretion
On 13 November 2009 a Registrar made the following orders and notations:
1.All applications are listed before the Docket Registrar at 11:30 am on 29 January 2010 in Court for review of matter.
2.Has the husband filed and served an affidavit about joinder of 2-5th Respondents? Are 2-5th Respondents going to file an interim application to be removed?
3.Did the husband and wife exchange a list of documents.
4.2-5th Respondents must file and serve within 7 days a Notice of Address for Service.
5.Respondent husband must file and serve by 11 January 2010 any relevant affidavit in relation to joinder of 2-5th Respondents and why they should not be removed from the proceedings.
6.I extend Order 13 may o 16 October 2009 such that the husband and wife must exchange a list of documents in their possession relevant to the dispute within 7 days.
7.Matter should be re-listed before Docket Registrar if there is a failure to comply.
8.The husband extends Undertaking given to the Court on 16 October 2009 to the next adjourned day of 29 January 2010.
On 9 March 2010 a Registrar made the following orders and notations:
1.All applications are listed before the Docket Registrar at 11:30 am on 7 May 2010 for outcome of interim hearing and possible allocation of CMF if ready.
2.The case is listed before a Registrar at 9:30 am on 28 April 2010 for husband’s Response filed 27 August 2009 and Amended Application filed on 26 February 2010.
3.The return date of 19 March 2010 is vacated.
4.Orders are made in accordance with the attached document titled ‘Minute of Order” marked as Exhibit 1.
“1.That within 6 weeks the Husband provide in writing, verified by Affidavit:
1.1particulars by way of points of claim setting out every head of relief sought against the Second Respondent, [W Holdings] Pty Limited, including:
Jurisdiction
1.1.1If the jurisdiction for a head of relief is by way of legislation, particularise that legislation including section numbers and legal principles relied upon.
1.1.2If the jurisdiction is by way of other legal principles, particularise the principle and the jurisprudence establishing that principle.
Facts Grounding Relief
1.1.3In relation to each head of relief sought, the particulars, including date and description, of each and every fact and each and every circumstance grounding the relief claimed.
Quantum
1.1.4In relation to each and every head of relief sought, the quantum contended to be payable.
Facts Grounding Quantum
1.1.5In relation to each head of relief sought, particulars as to the facts and circumstances providing the foundation for the calculations of each and every head of relief claimed.
2.That within 6 weeks the Husband provide in writing, verified by Affidavit:
2.1Particulars by way of points of claim setting out every head of relief sought against the 3rd Respondent, [K Enterprises] Pty Limited, including:
Jurisdiction
2.1.1If the jurisdiction for a head of relief is by way of legislation, particularise that legislation including section numbers and legal principles relied upon.
2.1.2If the jurisdiction is by way of other legal principles, particularise the principle and the jurisprudence establishing that principle.
Facts Grounding Relief
2.1.3In relation to each head of relief sought, the particulars, including date and description, of each and every fact and each and every circumstance grounding the relief claimed.
Quantum
2.1.4In relation to each and every head of relief sought, the quantum contended to be payable.
Facts Grounding Quantum
2.15In relation to each head of relief sought, particulars as to the facts and circumstances providing the foundation for the calculations of each and every head of relief claimed.
3.That within 6 weeks the Husband provide in writing, verified by Affidavit:
3.1Particulars by way of points of claim setting out every head of relief sought against the 4th Respondent, [HS Jong], including:
Jurisdiction
3.1.1If the jurisdiction for a head of relief is by way of legislation, particularise that legislation including section numbers and legal principles relief upon.
3.1.2If the jurisdiction is by way of other legal principles, particularise the principle and the jurisprudence establishing that principle.
Facts Grounding Relief
3.1.3In relation to each head of relief sought, the particulars, including date and description, of each and every fact and each and every circumstance grounding the relief claimed.
Quantum
3.1.4In relation to each and every head of relief sought, the quantum contended to be payable.
Facts Grounding Quantum
3.1.5In relation to each head of relief sought, particulars as to the facts and circumstances providing the foundation for the calculations of each and every head of relief claimed.”
On 7 May 2010 a Registrar made the following orders and notations:
1.I note that pursuant to the orders of 9 March 2010, the husband’s points of claim and particulars in support of same were lodged with the court on 6 May 2010 and verified by an affidavit of the same date. The 2-4th Respondents intend to rely upon that document in relation to their application for summary dismissal of the husband’s application against them filed 7 October 2009. It is otherwise noted that no other evidence is to be filed in relation to that application save and except as provided for in order 2 below.
2.I order the following in relation to further affidavits;
a) Within 14 days, the 2-4th Respondents must file and serve an affidavit limited only to the security for costs application; and
b) Within 14 days thereafter the respondent husband is to file and serve any affidavit he wishes to rely upon but only in relation to the security for costs application of the 2-4th Respondents.
3.I list the Further Amended Application in a Case of the 2-4th Respondents (in relation to summary dismissal or, in the alternative, permanent stay and/or security for costs) filed 26 February 2010 for hearing before a Judicial Registrar on 25 June 2010 at 10am. The lawyers estimate the hearing may take 1½ hours including reading time.
4.I excuse the wife from attending the listing on 25 June 2010 as the application does not relate to her.
5.I otherwise adjourn the substantive matter to a procedural hearing before me at 9am on 5 July 2010 by telephone for further directions. The parties are excused if legally represented. To participate in that telephone procedural hearing, the lawyers are to phone […] and then insert the code […].
6.I reserve all party’s costs.
Notwithstanding those orders, Amended Points of Claim were filed on 18 June 2010 and were relied on by the husband, without objection on behalf of the 2nd, 3rd and 4th Respondents.
The claims in question are something of a moveable feast. By his Response filed 7 October 2009, the husband sought:
1.ORDER that the applicant wife and first respondent "Husband" take all steps necessary as soon as reasonably practicable to cause the valuation of their respective real estate, personal property, shares, corporate or other financial interests and any other assets and cause payment to the Husband 60% thereof - and the Wife 40% thereof or division of such total assets as the Court determines.
2.To give effect to Order 1, an order that the Court make any order necessary for the prompt division of assets between the applicant wife and husband.
3.Order that the second respondent [W Holdings] Pty Ltd ACN […] ("[W Holdings]") is made to account to the Husband for all contributions made to it by the Husband.
4.Order that the [W Holdings] repay the husband all moneys that are owing pursuant to each and every agreement between the Husband and the company.
5.Order that the [W Holdings] hold it's property and assets on trust for the benefit of the husband to the extent of the total amount that the Court determines is owed by [W Holdings] to the husband.
6.Order in the alternative the company [W Holdings] be wound up and its assets distributed to the Husband in such equitable portion as the Courts deems appropriate
7.Order that the third respondent [K Enterprises] Pty Ltd ACN […] ( "[K Enterprises]") is made to account to the Husband for all contributions made to it by the Husband either directly, or by [W Holdings] or (father-in law) on behalf of the husband.
8.Order that the property and assets owned by [K Enterprises] is held on trust for the benefit of the husband to the extent of the amount that the Court determines is rightfully and equitably due to the husband.
9.In alternative Order [K Enterprises] be wound up and it's assets distributed to the Husband in such equitable portion as the Courts deems appropriate.
10.Order that Fourth Respondent [HS Jong] (Father-in-law) is made to account for all of the proceeds he received which are rightfully due to the Husband pursuant to each and every agreement or arrangement.
11.Order that the [HS Jong] (Father-in-law) repays to the Husband all monies due pursuant to each and every agreement between the Husband and the father - in- law.
12.And/or in the alternative to give any necessary effect to the above orders, order the fifth respondent company [B Company] ACN […] (deregistered) be re-registered for the purposes of these proceedings.
However, additional orders are set out in the husband’s Amended Points of Claim filed 18 June 2010, as follows:
FIRST RESPONDENT’S AMENDED POINTS OF CLAIM
1.An order that an enquiry be held to determine what profits have been made by the second and fourth respondent from the business of construction and property investment that was carried on by the parties from 1992 to 2006 and that the second, third and fourth respondent do pay to the first respondent 30% of the profits thereof.
2.An order that an enquiry be held to as to the amount of damages suffered by the first respondent and the fifth respondent by reason of the conduct of the second, third and fourth respondent and that the first and fifth respondent be compensated for the amount of damages suffered thereof.
3.Order that an enquiry to be held to determine what has been acquired by the second, third and fourth respondents using the first respondent and fifth respondents share of the said profits in relation to the second partnership or joint venture agreement and that it be declared that such property be held on trust for the first and fifth respondent to the extent of the contribution to acquisition from their share of the said profits, and that it be ordered the property determined to be held in trust for the first and fifth respondent be transferred to the first and fifth respondent and that all the necessary accounts and enquiries be held to determine what is due to the first and fifth respondent in respect of the second partnership or joint venture agreement both as to capital and income.
4. That for the above purposes, all other necessary orders be made, directions be given, accounts be taken or declarations made.
….
It is not entirely clear from the claims themselves what jurisdictional basis is relied on. In an affidavit of his solicitor filed 25 January 2010 it was asserted that the husband relied on estoppel, contract and constructive trust together with a provision of the Corporations Act. However, the Amended Points of Claim lodged 18 June 2010 represents:
“a. The first respondent relies on the court’s accrued jurisdiction in all matters pleaded against the second, third and fourth respondent.”
On the face of it this would seem to abandon the Corporations Act claim.
The Family Court of Australia can exercise accrued jurisdiction. In Warby & Warby[2001] FamCA 1469; (2002) FLC 93-091 the Full Court concluded:
79. We have formed the view that as a matter of law, the Family Court of Australia is not restricted to the determination of a family law claim or proceeding; it may exercise accrued jurisdiction to determine the non-federal aspects of a justiciable controversy of which the family law claim or cause of action forms a part. The factual circumstances of the case will determine whether the jurisdiction arises and whether it is appropriate to exercise the jurisdiction.
As to accrued jurisdiction in general, in Moorgate Tobacco Co Ltd v Philip Morris Ltd [1980] HCA 32; (1980) 145 CLR 457 the majority in the High Court said:
26. Once the subject matter for determination involves a federal claim, then the Court exercises jurisdiction by virtue of, and in accordance with, the authority conferred by s. 39 of the Judiciary Act. The "decision" to which s. 39 (2) (a) refers certainly comprehends so much of the decision as relates to the issues which arise for determination in federal jurisdiction. And for reasons already given it should be understood as comprehending the decision given in the entire proceeding, unless perhaps it can be shown that there was some distinct and unrelated non-federal claim, as, for example, where the federal claim and the non-federal claim are not based on a common substratum of facts. If, however, the two claims arise out of common facts and transactions, they cannot be described as distinct and unrelated and, accordingly, they are non-severable.
For the Court to exercise accrued jurisdiction the non-federal claims must arise out of the same substratum of facts as the family law claim – in this case a claim for property settlement.
As to the documents relied on, learned counsel for the husband referred not only to the Amended Points of Claim but also the affidavit material filed in his client’s case. In Custodio & Pinto and Ors / IC & WP and Ors[2006] FamCA 941; (2006) FLC 93-279 Finn J said:
14. Reliance was, however, placed on behalf of both the applicant third parties and to a greater extent by the respondent wife (with no objection being taken by either party) on the affidavit material of the husband (who is not a party to the summary dismissal proceedings). Certainly it is necessary to have regard to some of the affidavit material filed by the husband in order to understand certain of the orders and declarations which are sought by the wife and which are the subject of the summary dismissal application. It is also necessary to have regard to parts of the husband’s affidavit material to understand the wife's affidavit material.
15. It was of course accepted that in this jurisdiction in which there are no pleadings, it is necessary to have resort to the affidavit material in order to understand the substance of the claim which is sought to be summarily dismissed.
I accept that it is appropriate to take account of all of the documents of the husband to which I have been referred. Unfortunately I was not referred to any evidence in the wife’s case. As with Custodio & Pinto and Ors / IC & WP and Ors without some of the wife’s affidavit material it is difficult to understanding the substantive proceedings and therefore, to understand whether there is a common sub-stratum of facts between the property settlement proceedings and the husband’s cases against the third parties. It is possible to divine potential issues in the substantive proceedings that might involve third parties. In his affidavit filed 14 October 2009 the husband deposes:
47. I have never owned any vehicle since 1992 and [the wife’s] claim of me borrowing money from her mother to purchase the four wheel drive Pajero in October 2001 is not true.
…
50. Furthermore, if there were so much money owed to my ex-wife’s mother-in-law as was alleged in [the wife’s] affidavit …
…
82. I do not agree that [the wife] and I owe approximately $480,000 to my in-laws during our marriage …
They might be issues requiring an exploration of the same facts as relate to the husband’s claims against the third parties.
From the husband’s Response, the claims against W Holdings Pty Ltd are:
3.Order that the second respondent [W Holdings] Pty Ltd ACN […] ("[W Holdings]") is made to account to the Husband for all contributions made to it by the Husband.
4.Order that the [W Holdings] repay the husband all moneys that are owing pursuant to each and every agreement between the Husband and the company.
5.Order that the [W Holdings] hold it's property and assets on trust for the benefit of the husband to the extent of the total amount that the Court determines is owed by [W Holdings] to the husband.
6.Order in the alternative the company [W Holdings] be wound up and its assets distributed to the Husband in such equitable portion as the Courts deems appropriate
I take it that orders 5 and 6 are machinery orders. They would not fall within the definition of orders relying on the Court’s accrued jurisdiction. Order 3 might be an equitable claim based on a trust. Under section 79, contributions can only be made to the property of the marriage or to the family. It is not suggested that W Holdings is property of the marriage.
Order 4 would seem to be a claim based on a contract. In his Amended Points of Claim, the husband asserts that in 1992 a partnership agreement was entered into between the husband and W Holdings and others. At paragraphs 16 to 19 of his affidavit the husband gives evidence about a series of oral agreements. The inference from paragraph 28 is that the husband performed work pursuant to that agreement on a full time basis from 1992 to 2002. I gather that his claims arise from the commencement of that period.
The claims against K Enterprises Pty Ltd are:
7.Order that the third respondent [K Enterprises] Pty Ltd ACN […] ("[K Enterprises]") is made to account to the Husband for all contributions made to it by the Husband either directly, or by [W Holdings] or (father-in law) on behalf of the husband.
8.Order that the property and assets owned by [K Enterprises] is held on trust for the benefit of the husband to the extent of the amount that the Court determines is rightfully and equitably due to the husband.
9.In alternative Order [K Enterprises] be wound up and it's assets distributed to the Husband in such equitable portion as the Courts deems appropriate.
The basis of the claim against K Enterprises Pty Ltd is not clear. It is asserted that at no cost, K Enterprises Pty Ltd acquired a legal interest in a property at C. It is asserted that the husband and wife contributed to that property through the fifth respondent. The assertion is that K Enterprises Pty Ltd therefore holds its interest on trust for the fifth respondent. Paragraph 39 of the husband’s affidavit is not clear. I think the husband means to say that the third respondent acquired an interest in a project to develop two houses at C without making any contribution; that B Pty Ltd was entitled to an interest in the project as it had contributed $175,000 to the development of properties at D; that W Holdings applied the profits from the D project to the C project; that B Pty Ltd was promised 50% but later 33% of the C project; and that neither B Pty Ltd nor its principals, the husband and wife, have received any benefit from the C project. On those facts I am not sure why the relevant claim is against the third respondent.
Turning then to the claims against HS Jong:
10.Order that Fourth Respondent [HS Jong] (Father-in-law) is made to account for all of the proceeds he received which are rightfully due to the Husband pursuant to each and every agreement or arrangement.
11.Order that the [HS Jon] (Father-in-law) repays to the Husband all monies due pursuant to each and every agreement between the Husband and the father-in-law.
Order 10 would seem to be a claim based on a contract. In his Amended Points of Claim, the husband asserts that in 1992 a partnership agreement was entered into between the husband and W Holdings and others. He asserts that HS Jong was the principal and proprietor of W Holdings. At paragraphs 16 to 19 of his affidavit the husband gives evidence about a series of oral agreements. The inference from paragraph 28 is that the husband performed work pursuant to that agreement on a full time basis from 1992 to 2002.
The husband has not yet been required to file his evidence in the substantive proceedings.
Conclusion
Courts have been more robust about dismissing claims that turn on a question of law than those that turn on the facts. In Leerdam & Anor v Noori & Ors [2009] NSWCA 90 the New South Wales Court of Appeal (Spigelman CJ, Allsop P and Macfarlan JA) upheld an appeal against a refusal to summarily dismiss and strike out a claim in tort. Macfarlan JA with whom the Chief Justice and Allsop P agreed, said about summary dismissal:
75 Such a course should only be taken in a clear case. Descriptions of the test to be applied have included such phrases as “so obviously untenable that it cannot possibly succeed” and “manifestly groundless” (General Steel Industries Incv Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129). Particular caution is required where factual questions are involved as it is difficult to predict in advance of a final hearing the precise manner in which the evidence will unfold. Whilst caution is also required where, as here, the application turns on questions of law and there is no reasonable prospect that deficiencies in what is pleaded will be able to be cured by amendment, opportunities tosummarily dismiss or strike out claims will arise more frequently.
It is clear from the authorities to which I have been referred that I should not struggle to find in favour of the application for summary dismissal.
On the basis of the material before me it is not possible to say that the husband’s claims have no chance of success. I cannot see the link between the facts necessary to determine the property settlement claim and the non federal claims but that may come. I have not been told about the competing claims in the substantive proceedings, let alone the issues to be decided in those proceedings or the evidence that will be relied on. On the face of it the husband’s case against respondents 2, 3 and 4 seems weak in the extreme. There are no documents, the evidence about the agreements and arrangements is vague and the key events occurred up to 18 years ago. However, the fact that the case is weak cannot justify summary dismissal.
The circumstances of this case can be distinguished from a case such as B Pty Ltd And Ors & K And Anor[2008] FamCAFC 113; (2008) FLC 93-380 where the wife sought leave to amend her application to seek add a number of third parties and for orders to compel the trustees of a discretionary trust to make a capital distribution. The Full Court upheld an appeal against the trial judge allowing the wife to amend the application. The parties and the court treated the stance taken by the third parties and the husband as analogous to an application for summary dismissal of the wife’s proposed claim. The Full Court found that the application could not succeed.
The affidavit material before the trial judge in support of the amendment was discussed in the Full Court :
47.Morgan J had before her no statement of claim or equivalent; only the orders which the wife wished to add and an affidavit of the wife, in which the wife said:
Personal financial circumstances of the parties
5. The personal financial circumstances of the husband and I are relatively modest. …
…
7. That otherwise, the husband and I, throughout our marriage, always considered his hard work and dedication as a pivotal member of the [K] Group would pay off and, provide us with a stake in the Group that would, in effect, represent our superannuation. In fact, on different occasions during the course of our marriage, the husband advised me that he would be retiring at age 45 with “a nest egg” which grew during the marriage from $1M to $2M. The husband left me in no doubt that he and I would share in the financial rewards of the [K] Group which became extremely successful in the latter part of the 1990’s.
8. The [K] Group is a global organisation involved in the [mining industry], supplying highly technical equipment and plant as well as construction of the various processing plants. …
Type of lifestyle
9. As a family we enjoyed a high standard of living which, from time to time, was subsidised by lump sums of money which I believed to have been sourced from overseas and from companies within the Group.
The Full Court said:
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.
The Full Court noted the following passage from the judgment at first instance:
10.There was no dispute that under well established principles of equity the husband, as the object of discretionary trust, has no proprietary interest in the assets of the trust. In so far as the assets are concerned there is a mere expectancy that the trustee will, in the exercise of its discretion, make a distribution in his favour. He has an equitable chose-in-action which is the right to insist upon due administration of the trust.
11.In oral submissions Senior Counsel for the respondents submitted that:
“There is no doubt that our friend can draw a connection between the marriage and the interest of a discretionary beneficiary, but not to the assets of the trust. The degree of connection between the husband’s interest in the trust and the marriage is being employed by the applicant and perhaps even as a device … which conceals an important leap of logic.”
12.Absent the provisions of Part VIIIAA of the Act that submission is clearly correct and an application for an order to compel a trustee to exercise its discretion in [sic] particular way would be “doomed to failure”. In written submissions it was put for the wife that:
“What this order proposes is the trustee at the direction of the Court vesting capital in one object. The trustee has the power to do so. All the Court is doing is constraining its discretion and compelling [sic] to exercise that power in a particular way at particular time.”
13.To say that is “all the Court is doing” is quite an understatement. As the wife's submissions went on to acknowledge it is quite contrary to general equitable principles to fetter the exercise of a trustee's discretion in this way.
The Full Court did not disagree with much of the trial judge’s analysis but disagreed that there was an arguable case that Section 90AE could support the orders sought. It found:
63.In our view, the correct conclusion was that, as the wife set out her proposed claim, she did not show that the power conferred by s 90AE could arguably be engaged. Any order made pursuant to s 90AE(2)(b) must be for the purpose of effecting a division of property between the parties. The order that the wife proposed was for the purpose of increasing the property of the parties, by an unknown amount and on unknown principles.
64.It would be impossible, based upon the wife’s deposition, to identify what the wife said were the facts material to a cause of action which would lead to an order that the trustees of a discretionary trust distribute to one of a group of beneficiaries. The amendment would have joined the third parties to an unformulated claim to which they would have had great difficulty responding. That Morgan J did not address this issue is, in our view, an appealable error.
Those are not the circumstances before me. Here there is no question of lack of power, the real complaint is that the claim is too vague.
The application for summary dismissal fails.
The Approach to an Application for a Permanent Stay
Learned counsel for the third parties submits that:
·A permanent stay is ordered to prevent a substantial injustice arising out of what must have been seen as an abuse of process in allowing proceedings to continue.
·The critical factor in the exercise of discretion in ordering a permanent stay is the conduct of the parties seeking substantive relief.
·Consideration of the merits of the plaintiff’s claim are probative. McHugh J provided useful guidance in how discretion is to be exercised in determining such an application – that is, the commencement or continuance of proceedings creates injustice or unfairness to one of the parties.
Learned counsel for the husband does not cavil with that submission.
In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR541 McHugh J was dealing an appeal against a refusal to grant an extension of time and said at pg. 552:
Thus for many centuries the law has recognised the need to commence actions promptly and to prosecute them promptly once commenced. As a result, courts exercising supervisory jurisdiction over other courts and tribunals in their jurisdictions have power to stay proceedings as abuses of process if they are satisfied that, by reason of delay or other matter, the commencement or continuation of the proceedings would involve injustice or unfairness to one of the parties [25] .
The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost [26] . Second, it is oppressive, even "cruel", to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed [27] . Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them [28] . Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period
Those concerns are no doubt correct but the difficulty for the third parties here is that I do not know if those same events are to be the subject of the property settlement proceedings.
I cannot find that a permanent stay is necessary to prevent a substantial injustice arising out an abuse of process in the form of allowing the husband’s application in respect of the third parties to continue.
It follows from the earlier findings that it is difficult to assess the prospects of success of his application but on the material before me, the husband’s prospects are poor.
On the face of it the husband has sat on his rights, in some instances, for nearly two decades but I do not know what other facts might have given rise to his late application. For example, it could be that there is a similarly, late-pressed liability in the property proceedings. I simply do not know.
The application for permanent stay fails.
The Approach to an Application for Security for Costs
In Luadaka & Luadaka [1998] FamCA 1520; (1998) 24 Fam LR 340; FLC 92-830 the Full Court said:
61. In our opinion, when dealing with an application for security for costs the general rule provided for in s 117(1) applies, namely that subject to s 117(2) each party to proceedings shall bear his or her own costs. However, if the court is satisfied that there are circumstances that would justify an order then the court may, subject to s 117(2A), make such order for security for costs as the court considers just. It is not necessary to establish that there are special circumstances. However, it is necessary to establish that there are justifying circumstances. The decision to order security for costs is discretionary, both as to whether to order security, and as to the amount to be secured.
62. The purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other. In considering whether or not to make an order, apart from those referred to in s.117(2A), matters which may be relevant include the following:
62.1 It may be relevant to take into account the means of an applicant to satisfy an order for costs if he or she is unsuccessful. Ordinarily the means of the applicant is not alone sufficient to justify an order for costs because of the rule that poverty should be no bar to justice. This is reinforced by s.117 (1). However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order. Financial weakness may be relevant, for example, if the applicant is a company. In relation to the means of the respondent, who is the applicant for security, it was held by Goldstein J in Alexander and Alexander (supra) and Gee J in B and B (supra) that the question is whether or not the respondent is able to pay his or her costs. Section 117(2A)(a) requires consideration of the financial circumstances of both parties. However, we do not accept that it will only be in cases where the applicant for security does not have the means to meet his or her costs that an order would be made. In appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.
62.2 The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd (supra). However, ordinarily the court will not undertake a detailed assessment of the likelihood of the applicant's success unless it can be demonstrated that there is a high probability of success or failure: Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR ¶40-972. This is because of the lack of material at the time the application is dealt with. However, such an assessment may be possible in circumstances where, as in this case, affidavits have been filed in which the case sought to be made out is set out.
62.3 It is a relevant consideration whether the applicant's claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham: Parkinson & Co Ltd v Triplan Pty Ltd (supra); Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133; J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790.
62.4 It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation. In Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Byrne J said at 306:
''A factor in deciding whether security should be required is that the order may well mean that the action cannot proceed. That prospect does not require refusal of the application but it is often a significant matter.''
See also Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 and Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480.
62.5 It may be relevant to consider whether or not the litigation may involve a matter of public importance: Equity Access Ltd v Westpac Banking Corporation (supra); Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248. In Quick on Costs at [ 4.9440] it is said that this will militate against the making of an order.
62.6 It may be relevant to consider whether or not there has been delay in bringing the application. An application may be refused if there is delay in making the application and prejudice is caused to the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164.
62.7 Other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.
63. We do not suggest that the above matters are exhaustive of what may be taken into account. However, such matters may be relevant to the exercise of discretion.
The Rules of Court relevantly provide:
FAMILY LAW RULES 2004 - RULE 19.05
Application for security for costs (1) A respondent may apply for an order that the applicant in the case give security for the respondent’s costs.
Note Chapter 5 sets out the procedure for making an application for interim, procedural, ancillary or other incidental orders.
(2) In deciding whether to make an order, the court may consider any of the following matters:
(a) the applicant’s financial means;
(b) the prospects of success or merits of the application;
(c) the genuineness of the application;
(d) whether the applicant’s lack of financial means was caused by the respondent’s conduct;
(e) whether an order for security for costs would be oppressive or would stifle the case;
(f) whether the case involves a matter of public importance;
(g) whether a party has an order, in the same or another case (including a case in another court), against the other party for costs that remains unpaid;
(h) whether the applicant ordinarily resides outside Australia;
(i) the likely costs of the case;
(j) whether the applicant is a corporation;
(k) whether a party is receiving legal aid.
Dealing with those considerations: There is no evidence before me as to the husband’s means.
It follows from the above findings that it is difficult to assess the prospects of success of his application but on the material before me, they are poor.
It is impossible to make a finding about the genuineness of his application.
It must follow from the husband’s material that he feels he (and the wife) would be better off but for the conduct of the respondents. I am not in a position to make a finding on the issue.
No submissions were made on behalf of the husband to that effect. Although not quite on the point, the submission is that there are enough assets of the husband and the wife to satisfy a proper order.
There is no suggestion that the case involves a matter of public importance.
There is an estimate of $50,000 from the solicitor for the 2nd, 3rd and 4th respondents as to the likely costs for each of them.
The second and third respondents are corporations.
I have not been told that any of the respondents is in receipt of legal aid.
In Laudaka the Full Court said that the purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.
The situation here is somewhat out of the ordinary in that the husband has involved strangers to the marriage in the property settlement proceedings. Unlike he and the wife, the 2nd, 3rd and 4th respondents do not seek orders for property settlement. Nevertheless the principles in section 117 apply. I am not satisfied that an order for security for costs could be met or that it is necessary to secure justice between the parties.
The application for security for costs fails.
I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan
Associate:
Date: 9 July 2010
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