Jordan & Sutton (No 2)

[2022] FedCFamC1F 850

Federal Circuit and Family Court of Australia

(DIVISION 1)

Jordan & Sutton (No 2) [2022] FedCFamC1F 850

File number(s):

SYC 6819 of 2018

Judgment of:

HARPER J

Date of judgment:

4 November 2022

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Statutory interpretation – Rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Part VIIIAA of the Family Law Act1975 (Cth) (“the Act”) – Where wife seeks to join numerous third parties to property adjustment proceedings between husband and wife pursuant to r 3.03(4) – Where third parties are shareholders and noteholders under financing agreements of a global group of companies in which the husband has a controlling stake – Where shareholders and noteholders are numerous, geographically disperse and range from corporate financiers to individuals – Parent company is the Fourth Respondent – Wife seeks property adjustment orders which will affect the rights of shareholders and noteholders under Part VIIIAA and s 90AE of the Act – Wife’s proposed property adjustment orders involve a significant transfer of shares in parent company – Where the transfer of shares could result in a change of control or trigger default under financing agreements – Where husband, shareholders and noteholders resist joinder – Where majority of shareholders have given consent for the Fourth Respondent to appear and make representations on their behalf – Whether it is “necessary” to join third parties as parties to the proceedings – Finding made that the Fourth Respondent and shareholders’ rights and interests are aligned – Where it is appropriate for Fourth Respondent to represent majority of shareholders – Where it is unnecessary to join shareholders as parties to the proceedings – Finding that there is no single entity capable of representing noteholders’ interests – Court will likely require complex financial evidence at final hearing, possibly from noteholders – Finding made that it is necessary to join noteholders as parties to the proceedings –Where it is open to noteholders to determine the extent to which they choose to participate in proceedings as parties.

Legislation:

Family Law Act1975 (Cth) Pt VIIIA, ss 79, 90AA, 90AB, 90AC, 90AD, 90AE, 90AF

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pts 3.1, 3.2, rr 3.01, 3.03, 3.04, 3.05, 3.07

Family Law Rules2004 (Cth) r 6.02(1)

Cases cited:

AC & VC (2013) FLC 93-540; [2013] FamCAFC 60

Arida v Arida [2015] NSWCA 170

Bergman and Bergman (No. 6) [2008] FamCA 710

Dovgan & Dovgan [2021] FamCA 306

In the matter Glenvine Pty Limited [2020] NSWSC 866

In the matter of ZH International Pty Ltd (in liquidation) (2022) 160 ACSR 473; [2022] NSWSC 2

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

Jordan & Sutton [2022] FedCFamC1F 553

Khalif & Khalif (No 2) [2021] FedCFamC1F 308

Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6

Pencious & Pencious [2010] FamCA 605

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

R v T [2020] WASCA 109

Samootin v Wagner (2006) FLC 93-265; [2006] FamCA 432

Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440

Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; [2007] NSWCA 75

Wayne & Dillon (2008) 40 Fam LR 543; [2008] FamCAFC 204

XYZ Pty Ltd & Charisteas (2017) FLC 93-782; [2017] FamCAFC 112

Division:

Division 1 First Instance

Number of paragraphs:

79

Date of hearing:

10 October 2022

Place:

Sydney

Solicitor for the Applicant:

Barkus Doolan Winning

Counsel for the Applicant:

Mr Newlinds SC with Mr Gray

Counsel for the First Respondent:

Mr Henry SC, with Mr Barnett and Mr Springthorpe

Solicitor for the First Respondent:

Pearson Emerson Family Lawyers

The Second and Third Respondents:

No appearance required

Counsel for the Fourth Respondent:

Mr Hartford-Davis with Ms Dyon

Solicitor for the Fourth Respondent:

Clayton Utz

Counsel for the Intervener:

Mr Dick SC with Mr Ford

Solicitor for the Intervener:

Herbert Smith Freehills

ORDERS

SYC 6819 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS JORDAN

Applicant

AND:

MR SUTTON

First Respondent

B PTY LTD and D PTY LTD

Second and Third Respondents

F GROUP LIMITED

Fourth Respondent

7TH TO 22ND PUTATIVE RESPONDENTS

Intervener

order made by:	HARPER J
DATE OF ORDER:	4 NOVEMBER 2022

THE COURT ORDERS THAT:

1.Pursuant to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), the entities identified in Schedule 3 hereto be joined as parties to the proceedings.

2.The Amended Application in a Proceeding filed by the Applicant Wife on 15 July 2022 be otherwise dismissed.

3.The proceedings be adjourned for Mention on 18 November 2022 at 9.30am.

4.By no later than 2.00pm on 17 November 2022, the parties are to submit to Chambers a proposed minute of orders to be made by consent for the further conduct of the proceedings, or in the absence of agreement, competing proposals.

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 the pseudonym Jordan & Sutton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

HARPER J:

Introduction

1. These are property adjustment proceedings between the Applicant Wife, Ms Jordan (“the wife”) and the First Respondent Husband, Mr Sutton (“the husband”).

2. It is unnecessary to refer to the Second and Third Respondents separately for the purposes of this judgment.

3. F Limited (“F Limited”) is the Fourth Respondent.

4. I explained some of the relevant background to the proceedings in my earlier judgment, Jordan & Sutton [2022] FedCFamC1F 553:

   2.The proceedings were commenced in 2018 and included parenting issues, which have now been resolved.

   3.The financial issues are listed for final hearing commencing on 6 February 2023 with an estimate of three weeks.

   4.There is no dispute that the property pool is vast. It has been valued by a single expert, Mr E, in the region of $3.5 billion, and even though the husband does not agree with this value, he accepts the value is at least $2.7 billion. The property pool is complex and comprised of numerous parcels of real property, with a value of approximately $55 million, together with the highly valuable shareholdings of the husband in a corporate group known as F Group, of which the principal corporate entity is F Limited (“F Limited”). The husband holds, directly and indirectly, a majority shareholding in F Limited of approximately 61.3 percent. This shareholding of the husband carries, by far, the bulk of the value in the property pool. It is unnecessary for the purposes of this judgment to describe otherwise the components of the F Group, except to the extent set out in these reasons.

   5.There was no dispute that the husband’s shareholding in F Limited, and therefore his ability to deal with that shareholding, is subject, directly or indirectly, to a number of third party rights and obligations through a Note Subscription Agreement dated 3 October 2019 involving a number of financiers, a Shareholders Agreement dated 2 October 2019 between F Limited and F Limited Shareholders from time to time, and possibly certain lien facility agreements, although the impact of those agreements on the husband’s shareholding has not yet become clear. I will refer to these as “the third party agreements” for the purposes of this judgment.

5. It was common ground, and demonstrated by the single expert evidence of Mr E, that the husband owns shares in a multitude of companies. As pointed out in the excerpt from my earlier judgment, this can be called the F Group. In particular, the husband holds a controlling stake in F Limited by reason of direct ownership of F Limited shares, and the complete or substantial ownership of shares in other companies which themselves own shares in F Limited. It is unnecessary to set out the details of these shareholdings, except as referred to in the course of these reasons.

6. On 15 July 2022, the wife filed an Amended Application in a Proceeding, which sought a range of orders including disclosure, and orders joining numerous additional parties. The list of proposed parties is set out at the end of these reasons in Schedule 1. This judgment deals only with the question of joinder.

7. The impulse for joinder of the proposed parties arises from the claim of the wife to the in specie share transfers, explained below at [14]–[18], because the relationship between the husband, the other shareholders of F Limited, and the Noteholders are regulated by the Shareholders’ Agreement and the Note Subscription Agreement. All the proposed parties have an interest in the Note Subscription Agreement and Shareholders’ Agreement. The terms and purpose of the agreements are discussed further below at [19]–[24].

8. The application for joinder was listed for hearing on 10 October 2022. As explained shortly, there was evidence of effective service on all proposed parties who had in an interest in the application for joinder.

9. A list of F Limited’s shareholders, excluding the husband, and five shareholders appearing in Schedule 3, is set out at the end of these reasons in Schedule 2. I will refer to them as the “Shareholders”.

10. The evidence also showed that F Limited notified the Shareholders, explained the litigation, expressed the view that the interests of the company were aligned with their interests as shareholders, and invited those shareholders to indicate whether they wished to be joined as parties, and if they were content for F Limited to lead any evidence and make submissions on their behalf, both for the application for joinder and the proceedings generally. All of the Shareholders responded, saying they did not wish to be joined as parties. Thirty nine of the Shareholders made clear that they wished F Limited to appear and make submissions on their behalf for the purposes of the joinder application and in the proceedings generally. Eight of the Shareholders objected to joinder but did not express a view as to whether they wanted F Limited to appear and make submissions on their behalf. They did not, however, appear or otherwise seek to be heard.

11. Another group, comprising 15 parties and described as the “7^th to 22^nd Putative Respondents”, appeared with separate representation and made separate submissions. They are set out in Schedule 3 to this judgment. Five of these entities are Shareholders, namely, K Pty Ltd, L Investments Limited, L1 Investments LLC, L2 Investments LLC, and L3 Investments LLC, who informed F Limited that they wished to make their own submissions. The other ten are parties to the Note Subscription Agreement. For convenience, I will refer to this whole group as the “Noteholders”.

12. So in summary, there were separate appearances for, and I received submissions from, the wife, the husband, F Limited for itself and most of its shareholders, and the Noteholders.

13. It was not made entirely clear whether two other companies, F1 Pty Ltd (“F1 Pty Ltd”) and F2 Pty Ltd (“F2 Pty Ltd”) were represented by F Limited. They are nominated as the first two proposed parties in Schedule 1. They are parties to the Note Subscription Agreement, as described below, but were not included in the Noteholders in Schedule 3. They are not shareholders in F Limited. However, F1 Pty Ltd is a wholly owned subsidiary of F2 Pty Ltd, which is wholly owned by F Limited. While this does not mean that the position of these companies is identical to that of the Shareholders, their position is relevantly identical with that of F Limited, which is already a party. On that basis, I will assume that F Limited’s and the Noteholders’ submissions resisting joinder were made on behalf of both these companies as well, and except where otherwise indicated in these reasons, I will not refer to them separately.

    Corporate Group Asset Claims

14. It is necessary to describe and summarise aspects of the wife’s claims in order to determine the question of joinder. Her proposed final orders are articulated in an Amended Initiating Application filed on 27 July 2022. Importantly, these are expressed as a range of alternatives. For simplicity, I have adopted the definitions used by the wife in her application, and for the purpose of this judgment I confine the summary to those claims relating to the assets entitled ‘Corporate Group Assets’. I note that the wife’s Amended Initiating Application also includes alternative claims for the assets entitled ‘Non-Corporate Group Assets’ that form part of the matrimonial property pool. The formulation of those claims does not raise the question of joinder of the proposed parties the subject of this judgment.

15. In respect of ‘Corporate Group Assets’, the wife formulates two alternative claims, “A” and “B”.

16. In “Final Orders – Alternative A – Corporate Group Assets”, the wife seeks orders to the effect that:

    (1)The husband transfer to the wife 1,144,272 of the husband’s F Limited Shares and the totality of the husband’s 3,193,899 M Pty Ltd (“M Pty Ltd”) shares, free and clear of any mortgage or other encumbrance. This will result in the wife having a direct and indirect shareholding in F Limited totalling 36.1 per cent.

    (2)In order to give effect to the orders regarding the transfer of the husband’s shares as identified above, the wife seeks

    (a)orders setting aside the operation of any provisions of any Relevant Document which may restrict or impact the transfer of shares or impact the wife becoming a shareholder in F Limited; or

    (b)in the alternative, that the Court direct each of the parties to irrevocably and unconditionally waive, release and agree not to enforce or otherwise assert or claim any right or entitlement that each such party may have under or in connection with the Relevant Documents that may arise as a result or as a consequence of the transfer of shares or of the wife becoming a shareholder.

    (3)Orders 1 and 2 be subject to, and conditional upon the wife delivering to F Limited a duly executed Shareholders Agreement Accession Deed.

    (6)Except as set out in the orders proposed, each of the husband and the wife will be declared solely entitled to the property and financial resources in their name, possession or control.

17. In “Final Orders – B– Corporate Group Assets”, the wife seeks orders to the effect that:

    (1)The husband transfer to the wife 458,724 of the husband’s F Limited Shares and the totality of the husband’s M Pty Ltd Shares, free and clear of any mortgage or other entitlement. This will result in the wife having a direct and indirect shareholding in F Limited totalling 21.3 per cent.

    (2)In order to give effect to the orders regarding the transfer of the husband’s shares as identified above, the wife seeks

    (a)orders setting aside the operation of any provisions of any Relevant Document which may restrict or impact the transfer of shares or impact the wife becoming a shareholder in F Limited; or

    (b)in the alternative, that the Court direct each of the parties to irrevocably and unconditionally waive, release and agree not to enforce or otherwise assert or claim any right or entitlement that each such party may have under or in connection with the Relevant Documents that may arise as a result or as a consequence of the transfer of shares or of the wife becoming a shareholder.

    (3)Orders 1 and 2 be subject to, and conditional upon the wife delivering to F Limited a duly executed Shareholders Agreement Accession Deed.

    (4)The husband pay to the wife the Agreed Sum.

18. It can be seen that central to these claims are in specie transfers of two parcels of shares, in F Limited and M Pty Ltd. This ultimately is concerned with a substantial shareholding in F Limited because M Pty Ltd owns 528,227 shares in F Limited and the husband owns 3,193,899 shares in M Pty Ltd.

    The Shareholders’ Agreement and the Note Subscription Agreement

19. The Shareholders’ Agreement and the Note Subscription Agreement are complex commercial agreements. It is unnecessary to explore the terms of either agreement in great detail for the purposes of this judgment, except to make the following observations.

20. First, the Shareholders’ Agreement relates specifically to shares in F Limited. There are specific provisions regulating the transfer of shares giving existing Equity Shareholders the pre-emptive right to purchase the shares of another shareholder, with a mechanism to strike a transfer price if there is no agreement on price (Clauses 13 and 18). In other words, a transfer of existing shares cannot take place without the transferor first offering the shares to other shareholders. It is only after this has happened in accordance with the terms of the agreement that shares can then be sold to third parties (Clause 13.12). There was no dispute that the alternative outcomes proposed by the wife in the proceedings, summarised above, would, if ordered, override and interfere with these rights of the existing F Limited shareholders.

21. Secondly, the Note Subscription Agreement has had a number of iterations. The Fourth Amendment Agreement of the Note Subscription Agreement is dated 13 December 2021. The agreement has three central parties. F1 Pty Ltd is the Issuer of the notes, while F2 Pty Ltd is the Guarantor. F3 Pty Ltd acts as Agent for the noteholders, while F4 Pty Ltd is the Security Trustee. The Noteholders subscribe for notes as a means of providing finance to F1 Pty Ltd. The Note Subscription Agreement contemplates that there will be an Initial Public Offering (“IPO”) at some point. It involves an enormous amount of funding of up to $1 billion. The control of F Limited is a critical aspect of the Note Subscription Agreement in the sense that one Event of Default is a Change of Control which is defined to happen if:

    (a)the husband, trusts, companies, vehicles and/or other entities owned or controlled by him and/or his family members (each a “Permitted Holder”) at any time cease to own, in the aggregate, directly or indirectly, beneficially and free and clear of any Liens (other than Permitted Liens) thereon, at least 40 per cent of the aggregate voting power of the outstanding Voting Stock of Holdings; or

    (b)the husband does not have effective control (as defined in s 50AA of the Corporations Act 2001 (Cth)) of Holdings; or

    (c)the husband ceases to hold the right or ability by voting power, contract or otherwise to elect or designate for election at least a majority of the board of directors (or analogous governing body) of Holdings; or

    (d)the husband breaches a non-compete agreement which he has separately entered into.

22. Thirdly, as a matter of construction, it is plain that the role of the husband in owning and conducting the numerous businesses falling within the F Group is a central element of the Note Subscription Agreement.

1. Fourthly, there was evidence that in addition to the Note Subscription Agreement, a First and Second Lien Syndicated Facility Agreement are in existence, both dated 31 March 2022, to which F3 Pty Ltd, as Agent, and F4 Pty Ltd as Security Trustee, are also parties. K1 Pty Ltd and N Bank are Joint Lead Arrangers and Bookrunners for the provision of finance. Beyond these entities there are also numerous other entities nominated as Lenders under each agreement. In both Lien Syndicated Facility Agreements the obligors, as borrowers or guarantors, are numerous companies in the F Group. It is clear that finance has been provided in tranches of Australian dollars and US dollars. The exact relationship between the Note Subscription Agreement and the Lien Syndicated Facility Agreements was not clear in the evidence, but I infer that, in summary, together they constitute, at least in part, the extensive and complex finance arrangements for the F Group.

2. Fifthly, the parties to these complex agreements are numerous, located in both hemispheres of the globe, and range from corporate financiers to individuals. It is plain that a number of the parties to the Note Subscription Agreement are either themselves, or are associated with, large well known financial institutions, such as K Pty Ltd, which ordinarily can be taken to have investors of their own, while pursuant to the Lien Syndicated Facility Agreements, numerous entities have exposure to the commercial activities and success of the F Group.

3. Consequently, the wife’s alternative proposals “A” and “B” summarised above, since they involve a substantial transfer of shares to her from the husband or M Pty Ltd, a company he controls, would materially and significantly change, directly or indirectly, the level of control of the husband in the numerous business which he owns and manages and which constitute the F Group. Even if the Court ultimately made orders which did not constitute a Change of Control, and thus an Event of Default under the Note Subscription Agreement, the Noteholders’ interests will be materially affected because they will be financing a large corporate group in which the wife and the husband will be major shareholders, rather than the husband alone.

   Part VIIIAA

4. The wife relies upon the provisions of Pt VIIIAA of the Family Law Act1975 (Cth) (“the Act”) for the power to make the orders sought in alternatives “A” and “B”. In order to understand the competing contentions about joinder, it is necessary to set out a number of relevant provisions of Pt VIIIAA.

5. For the purposes of Pt VIIIAA, “third party” in relation to a marriage means “a person who is not a party to the marriage” (s 90AB).

6. Section 90AC provides:

   This Part overrides other laws, trust deeds etc.

   (1) This Part has effect despite anything to the contrary in any of the following (whether made before or after the commencement of this Part):

   (a) any other law (whether written or unwritten) of the Commonwealth, a State or Territory;

   (b)       anything in a trust deed or other instrument.

   (2)Without limiting subsection (1), nothing done in compliance with this Part by a third party in relation to a marriage is to be treated as resulting in a contravention of a law or instrument referred to in subsection (1).

7. This section is expressed in very broad terms. It makes clear that Pt VIIIAA can override both state and federal legislation and privately executed instruments such as contracts and trust deeds, although it protects third parties from allegations of contraventions of other state or federal laws, and breaches of trust or contract. This means Pt VIIIAA has effect despite anything to the contrary, for example, in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) including r 3.01 concerning joinder, and could potentially override the provisions of the Shareholders’ Agreement and the Note Subscription Agreement.

8. Section 90AD provides that a “debt” of a party to a marriage is to be taken to be “property” of the party to the marriage, inverting the ordinary concepts of asset and liability.

9. Section 90AE is in the following terms:

   Court may make an order under section 79 binding a third party

   (1)In proceedings under section 79, the court may make any of the following orders;

   (a)an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;

   (b)an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;

   (c) an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;

   (d)an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party.

   (2) In proceedings under section 79, the court may make any other order 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.

   (3)      The court may only make an order under subsection (1) or (2) if:

   (a)the making of the order 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 concerns a debt of a party to the marriage–it is not foreseeable at the time that the order is made that to make the order 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; and

   (d)the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and

   (e)the court is satisfied that the order takes into account the matters mentioned in subsection (4).

   (4)      The matters are as follows:

   (a)       the taxation effect (if any) of the order on the parties to the marriage;

   (b)       the taxation effect (if any) of the order on the third party;

   (c)the social security effect (if any) of the order on the parties to the marriage;

   (d)       the third party's administrative costs in relation to the order;

   (e)if the order 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;

   Note: See paragraph (3)(b) for requirements for making the order in these circumstances.

   Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.

   (f)the economic, legal or other capacity of the third party to comply with the order;

   Example: The legal capacity of the third party to comply with the order could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order despite the terms of the trust deed. If the court does so, the order will have effect despite those terms (see section 90AC).

   (g)if, as a result of the third party being accorded procedural fairness in relation to the making of the order, the third party raises any other matters–those matters;

   Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

   (h)       any other matter that the court considers relevant.

10. In Dovgan & Dovgan [2021] FamCA 306 at [295]–[297], I made the following comments on s 90AE and citations to authority, which I repeat and adopt for present purposes:

    295.The range of orders that the Court can make is broad. For example, orders can be made under s 90AE(2)(b) or s 90AF(2)(b) altering “the rights, liabilities or property interests of a third party in relation to the marriage”. The expression “in relation to the marriage” is important and has been held to mean the exercise of discretion is carefully linked and sufficiently connected to the subject matter of the marriage and matrimonial causes: Hunt v Hunt at [119]; XYZ Pty Ltd and Anor & Charisteas & Ors; ABC Pty Ltd & Charisteas and Ors (2017) FLC 93-782; [2017] FamCAFC 112 at [89]. By reason of s 90AC(1), such an order overrides the provisions of a trust deed. In Hunt & Hunt (2006) 36 Fam LR 64; [2006] FamCA 167 (“Hunt & Hunt”), O’Ryan J held that Part VIIIAA did not contemplate “some arbitrary invasion of the rights of a third party but an alteration of those rights where they are sufficiently connected to the division of the property between parties to a marriage”. The Full Court in B Pty Ltd & Ors & K & Anor [2008] FamCAFC 113; (2008) FLC 93-380 at [63] made clear that any order made under these sections must be for the purpose of effecting the division of a property between the parties, and cannot be used for the purpose of increasing the property of the parties. In Allan and Allan and Ors [2009] FamCA 553; 41 Fam LR 565 at [99] Watts J emphasised that the sections cannot be used “to deprive a third party of its rights simply to benefit a party to the marriage”. The same comment applies to property interests.

    296.In Commissioner of Taxation v Tomaras (2018) 265 CLR 434; (2018) 93 ALJR 118; [2018] HCA 62 Gordon J at [73] said Part VIIIAA is “facultative and protective”. In that decision the High Court emphasised Part VIIIAA sits alongside and is ancillary to s 79 of the Act (at [4], [66]) and the power to make orders binding third parties only arises if the conditions in s 90AE(3), …are satisfied…

    297.There is no definition of “rights” in the Act nor do the provisions of Part VIIIAA indicate clearly what “rights” are contemplated by s 90AE(2)(b) or 90AF(2)(f). The word is wide in scope. For example, in Tomaras there was extensive mention of a taxpayers rights to object to assessment, and the rights of the Australian Taxation Office to collect revenue. It is not limited to property rights as defined on ordinary principles. The presence of “property interests” as a separate elements of the collocation “the rights, liabilities or property interests of a third party” shows this…

11. In relation to the requirement in s 90AE(3)(a), that the making of the proposed order is “reasonably necessary” or “reasonably appropriate and adapted” to effect a division of matrimonial property, the Full Court has held both phrases should be read together with the balance of the paragraph as providing “the requisite sufficient connection between the making of the order … in relation to a third party and the core of the marriage and matrimonial causes power” and this construction “meets the test which marks the limits of the power and discretion of the Court”: AC & VC (2013) FLC 93-540 at [91].

12. It was common ground that the Court is empowered by the provisions of Pt VIIIAA to make an order that “alters the rights, liabilities or property interests of a third party in relation to the marriage” by s 90AA and s 90AE(2) of the Act. There was no dispute that the orders sought by the wife would involve a material change and interference with the rights of the other parties to the Shareholders’ Agreement and the Note Subscription Agreement.

13. Counsel for the wife summarised the wife’s case against the third parties as follows:

    No one is suggesting the third parties have done anything wrong, there’s any equity that attaches to the third parties, that they had notice of any scurrilous dealing or the like, and there is no cause of action, if you like, against the third parties.

    The case against the third parties is as simple and as complicated as this. As between the parties to the marriage, there is about to be a case, the exercise of which will be to work out what the matrimonial pool of assets are, to value those assets and then to work out what a just division of those assets between husband and wife is.

    It is inevitable that in that process, in order to implement whatever the ultimate order of the Court is, there is going to have be some dealing with these shares. That raises the prospect of interfering with the rights of the other parties so as to not destroy the very asset the parties are fighting about. Now, that’s the beginning, the middle and the end of the case. So there is no other material facts to plea against the third parties other than precisely the same facts that are put to the husband.

    (Transcript 10 October 2022, p.52 lines 4–17)

14. It is likely that, among other issues such as contributions during the relationship, there will loom large at trial, for example, questions of the sufficiency of the connection to a division of the spouse parties’ property, and the reasonable appropriateness of, and the equity and justice of any orders proposed by the wife to be made pursuant to s 90AE. I express no view about such questions, and make these observations simply in order to highlight some areas of likely debate in which the interests of the proposed parties will be unavoidably under consideration.

15. As senior counsel for the wife submitted, there was little dispute that some dealing with the husband’s shares would be inevitable in the outcome of this property adjustment litigation. It remains to be determined whether this would result in a payment to the wife or an in specie transfer of shares to the wife.

    Joinder

16. In John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 (“John Alexander's Clubs”) the High Court stated the well settled position under the general law concerning joinder:

    131. Walker Corporation submitted that where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. That submission is correct. The Court of Appeal…erred when it held to the contrary.

    132. In News Ltd v Australian Rugby Football League Ltd the Full Federal Court …said (127):

    Where the orders sought, establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have a claim or interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest.

17. It does not matter whether a proposed party wishes to participate in a proceeding: Arida v Arida [2015] NSWCA 170, per Sackville AJA at [19] (with Bell P and Macfarlan JA agreeing).

18. It is well settled that, applying these principles, it can be appropriate to join third parties to a marriage to proceedings in this Court, for example, to bind them in respect of declarations as to property interests pursuant to s 78 or as ancillary to the exercise of discretion in s 79 or s 106B to set aside dispositions: Valceski v Valceski (2007) 70 NSWLR 36 at [31]–[33]; Khalif & Khalif (No 2) [2021] FedCFamC1F 308 at [37]. Clearly, according to these principles, the existence of claims for orders affecting the rights or interests of third parties proposed to be joined usually compels the conclusion that those parties are “necessary”. Such joinder is, nonetheless, an exercise of the Court’s discretion.

19. Under the Act and the Rules, there is no special procedure or regime for representative proceedings, as in some other court. Joinder of parties is dealt with at several places. For example, in the Act, s 79(10) grants an entitlement to various classes of person to be joined as parties. These include creditors and any other person whose interests would be affected by the making of an order pursuant to s 79. No party here relies on this provision.

20. In the Rules, Pts 3.1 and 3.2 deal with necessary parties and adding and removing parties. Rule 3.03 sets out detailed methods for adding a party such as naming a party in an application, response or reply or amending an application or response, or with leave after the first court date: rr 3.03(1), (2), and (4). After the first court date, a party seeking to add a party must file an Application in a Proceeding accompanied by an affidavit setting out the facts supporting joinder, and service the proposed party: r 3.03(5). A party may apply themselves to be joined (r 3.04), removed (r 3.05), or intervene if they are entitled to do so (r 3.07).

21. The wife applies for leave pursuant to r 3.03(4). This appears to repose a discretion in the Court to join additional parties, which, as a judicial discretion, would ordinarily be exercised in accordance with well settled principles.

22. Rule 3.01, which is pivotal, is in the following terms:

    Necessary parties

    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.

    Example:If a party seeks an order of a kind referred to in section 90AE or 90AF of the Family Law Act, a third party who will be bound by the order must be joined as a respondent to the proceeding.

23. It was argued by F Limited and the Shareholders that the wording of r 3.01 is to an effect different to the general law principles, in that, construed in accordance with the ordinary meaning of its wording, the rule appears to have two limbs or preconditions. Firstly, that a third party’s rights “may” be affected by “an issue in the proceedings”, and secondly, their participation as a party “is necessary to determine all issues in dispute in the proceedings”. Understood in that way, unlike the general law position, the rule distinguishes the question of affectation of a third parties’ rights and interests from the question of their necessity to participate as a party. In other words, r 3.01 implicitly recognises a situation where proposed orders of the Court may affect the rights of a third party but, for whatever reason, their joinder is not “necessary’ to determine all issues in dispute in the proceedings. Accepting mandatory joinder is the purpose of the rule (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [93]), and if the criteria of the rule are satisfied, the joinder of the third party must be ordered. The Court’s discretion concerning adding parties otherwise reposed in r 3.04 or the general law is removed. If the two limbs of r 3.01 are satisfied, there is no option but joinder.

24. As made clear above, it was common ground that the rights of the Shareholders and Noteholders may be directly affected by an issue in the proceedings. The dispute was about the second limb, the necessity for joinder.

25. The wife argued that since her proposed alternative orders would plainly affect the rights of the proposed parties, and applying ordinary principles, their joinder is necessary and therefore mandatory. Senior counsel for the wife placed emphasis on the specific example given in r 3.01, which refers to claims for relief sought under s 90AE of the Act. While conceding that examples appearing in legislation or rules are neither exhaustive nor binding, he argued that the example is illustrative of the intention of the drafters, fully encapsulates the circumstances of the wife’s application, and is an example of the operation of the well settled position at general law.

26. The wife’s position receives some support from the judgment of Vaughan JA in R v T [2020] WASCA 109. In construing the predecessor to r 3.01, which was in identical terms (r 6.02(1) of the Family Law Rules2004), the Court expressed the following view at [203]:

    As will be seen from the next section of these reasons, rule 6.02(1) - at least as to its first limb - is reflective of the principles that inform the general law as to joinder. I am inclined to the view that the second limb (ie that of 'necessity') adds little to the first: where the court is invited to make an order directly affecting the rights or liabilities of a non-party, the non-party is a necessary party [John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 [131]]. In turn those principles are based on the principles which underpin the law of procedural fairness.

1. It can be seen that Vaughan JA did not consider that r 3.01 in truth has two limbs, because the supposed second limb added nothing to the first, and the rule embodied the general law position as set out in John Alexander's Clubs. Affectation of a third parties’ rights or liabilities itself created the necessity for joinder, and the need to afford procedural fairness lay at the foundation of such necessity. It would follow that joinder was mandatory in accordance with the rule, and, it should be said, consistent with the approach taken in authorities above at [32].

2. On the other hand, decisions in this Court have suggested that the rule has two limbs. For example, in Pencious & Pencious [2010] FamCA 605 at [4], Cronin J said:

   After pointing to the jurisdictional basis upon which orders are sought (if they are), the application for joinder (or the person seeking to defend having joined a person) must be able to show that the rights of those persons may be affected by an issue in the case but also that participation is necessary to enable the court to determine all issues in the case.

3. In resisting joinder, it was the shared contention of all respondents and proposed parties that, unlike other jurisdictions, in this Court the provisions of Pt VIIIAA of the Act themselves bear on the question of necessity for joinder, and inform the proper construction of r 3.01. Senior counsel for the husband drew my attention to Warnick J’s remarks in Wayne v Dillon (2008) 40 Fam LR 543 (“Wayne”), with respect to whether it is necessary to join parties to a proceeding at [18]:

   The word ‘necessary’ in r 11.02(1) must mean something more than ‘useful’ or ‘expeditious’. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified ‘case’, joinder  is unlikely to be ‘necessary’.

4. I observe here that at [19], Warnick J continued:

   However, if a cause of action, recognisable at law, against a ‘third party’ is particularised, then it is at least highly likely that joinder will be ‘necessary for the court to completely and finally determine all matters in dispute’…

5. The husband contended that the statutory regime created by Pt VIIIAA, and s 90AE specifically, was just such an “alternative means to joinder”, because it allows third parties to the marriage to participate in proceedings to an appropriate extent without being joined as a party, and empowers the Court to make orders binding them in the absence of joinder. This is because the mechanisms for third party participation provided by Pt VIIIAA are sufficient to determine the issues in dispute that may directly affect their interests and to afford them proper procedural fairness.

6. In submissions also embraced by F Limited, the Shareholders, and the Noteholders, the husband contended that if joinder was intended to be a necessary condition for the valid exercise of power in s 90AE or s 90AF in relation to the interests of a third party, then this would have been explicitly set out by Parliament in Pt VIIIAA of the Act. He argued that “Part VIIIAA is not prescriptive as to how procedural fairness is to be afforded to affected third parties and, in particular, does not mandate joinder” (husband’s case outline at [4]). Senior counsel for the Fourth Respondent additionally pointed to s 90AI and s 92 of the Act as examples of provisions which would be rendered redundant if joinder of a third party was a necessary precondition of procedural fairness and the exercise of the powers granted to the Court in Pt VIIIAA. For example, s 90AI provides that third parties may be served by any methods permitted by the Rules, a provision which would be without purpose if third parties were joined as parties. Thus, even if orders are made pursuant to s 90AE affecting the rights or interests of third parties, it is not necessary, either pursuant to r 3.01 or under the general law, to join them to participate as parties to the proceedings.

7. F Limited relied upon several authorities which are consistent in holding that s 90AE or 90AF are not concerned with the question of joinder. In Samootin v Wagner (2006) FLC 93-265 (“Samootin”), Kay J said at [18]:

   The Act really does not make provision for the joinder of parties. It provides for the Court to make orders against third parties, that is under s 90AE and it provides that they must be accorded procedural fairness in relation to the making of the orders. So that, if an application names them as parties, they effectively become parties to the proceedings…

8. Samootin concerned a situation where the applicant wife brought proceedings against, in addition to her ex-husband, another nine respondents, asserting that somehow the available property pool had been diminished by their conduct. The actual application before the Court was the wife’s application to join “pursuant to s 90AE” two further third parties to restrain them, pursuant to s 90AF, from taking or continuing bankruptcy proceedings against her, and to use s 90AE to deal with a costs order against her in the Supreme Court of New South Wales and the Court of Appeal. The wife sought to use s 90AE and s 90AF as a shield against liabilities imposed upon her by, and restrain proceedings in, other courts. The comment of Kay J was made in those circumstances. The connection between the relief sought against the proposed third parties and the s 79 proceedings as a matrimonial cause was not sufficiently close to justify joinder, but s 90AE itself was not directed to joinder.

9. In XYZ Pty Ltd & Charisteas (2017) FLC 93-782, the Full Court considered interlocutory orders restraining a corporate trustee of a discretionary trust, the sole shareholder of which was the husband’s mother, from dealing with its assets. Following Samootin, the Full Court said at [115]:

   … Section 90AE and s 90AF are specifically concerned with the giving of notice to third parties of orders sought against them and are not concerned with joinder ( Samootin  v Wagner [2006] FamCA 432; (2006) FLC 93-265 (“ Samootin ”)). The Act is silent about joinder and various methods have been described whereby a third party in fact becomes a party. For example, by being named on an application, by order and, in our view as occurred here, through service of a claim for relief seeking orders against them. Moreover as the discussion which follows demonstrates [the corporate trustee] was given a full right to participate in the application made against it. This argument is one of form over substance (Gould & Gould; Swire Investments Ltd [1993] FamCA 126; (1993) FLC 92-434).

10. In Bergman and Bergman (No. 6) [2008] FamCA 710, Young J declined to order joinder of third parties who were involved in commercial disputes with the husband, who had a Case Guardian, because the commercial disputes did not form part of a single justiciable controversy so as to fall within the Court’s jurisdiction. He concluded at [126]:

    The joinder of third parties is here primarily for a purpose somewhat separate and apart to property discussion and sub-ss90AE(1) and (2) are operative within what I regard to be only the true and genuine ambit of s79 proceedings…

11. In light of these authorities, I agree that the provisions of Pt VIIIAA are themselves not directed to joinder, although they can be used to make orders affecting the interests or assets of third parties to the marriage who participate in the proceedings but are not parties. I did not understand the wife to argue to the contrary. Rather, joinder is dealt with in the relevant parts of the Rules or under the general law. The question for the Court under r 3.01 will always be whether, in all the circumstances, joinder of third parties is “necessary”. Ultimately this is no different to the essential question posed to the Court by application of ordinary general law principles concerning joinder. Once the Court is satisfied that joinder is necessary, it will be ordered either under the mandatory terms of r 3.01 or in the exercise of discretion under the general law.

12. It was the tenor of the respondents’ submissions that affording procedural fairness to third parties largely determined the question of necessity. I do not accept this is correct. Procedural fairness is clearly essential for third parties, and required by both s 90AE and s 90AF. The existence of the provisions of Pt VIIIAA may serve to limit the circumstances in which a finding of necessity should be made. However, the issue of necessity of joinder can only be addressed by considering all the circumstances of the case, which include affectation of the third parties’ interests or assets, questions of prejudice and case management issues. Procedural fairness does not involve a fixed body of rules to be applied in a formulaic manner: Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451 at [59]. It is question of avoiding practical injustice: Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at [37]. There is an obvious overlap between the exercise of case management powers and avoiding practical injustice. I observe that case management powers are often more effectively exercised over parties to the proceedings.

13. In relation to the impact of Pt VIIIAA on the necessity for joinder, the difficulty is identifying to what extent its provisions may be said to limit the necessity for joinder. In that regard, senior counsel for the wife characterised the argument of the third parties (above at [54]) as reductive to the point of futility. Its logical consequence was that, in the context of Pt VIIIAA relief, joinder of the third parties would always be unnecessary because “for all intents and purposes, [the third parties] are going to be treated as parties, therefore, they will be accorded procedural fairness, therefore, the orders will be binding against them” (Transcript 10 October 2022, p.2 lines 42–44). In other words, there is no necessity to join the third parties because in all material respects, they will be treated as parties without joinder. As the wife argued, the contentions of the third parties, if correct, would mean there would never be a necessity to join third parties to resist orders made pursuant to s 90AE because they could be treated as parties for all intents and purposes, but not be joined. While I accept that a claim to the exercise of the powers in s 90AE in respect of the rights and interests of third parties does not necessarily require joinder, it is likely there will be circumstances where it does. Senior counsel for the wife went on to argue:

    My case, on the other hand, is that your Honour should be satisfied that they don’t have to be joined as parties for the purpose of these orders – which might or might not be made – being binding on them but that there is doubt that such orders would be binding on them. And when I say “doubt”, any amount of doubt then puts a risk on my client. And, at the end of the day, that’s the detriment or benefit that’s being weighed in the exercise of the power that your Honour is being asked to exercise.

    And so if it be right that this a case about nothing because they’re going to be treated as parties anyway, then all I need to do is show something that balances the discretion in my client’s favour and your Honour ought make the orders, and that is the risk that I’m going to identify as to the proper construction of the Act and the rules of this court.

    (Transcript 10 October 2022, p.3 lines 9–21)

14. An approach of treating third parties as parties in all material respects without joinder is not convincing. In my view, it emerges that the question of the necessity for joinder of third parties, where relief is sought pursuant to s 90AE, will be answered most readily by considering aspects of prejudice and case management considerations.

15. The wife submits that there will be no obvious greater efficiency or lesser cost involved in simply treating the third parties as if they were parties to the proceeding, to discharge the onus that they have been afforded procedural fairness. Rather, such a course of action may bring with it all the ordinary procedural issues with the additional onus and ambiguity associated with determining whether the third parties have been afforded procedural fairness. I generally accept this argument.

16. It is argued by both the husband and the Fourth Respondent that in this matter, the 65 parties the wife seeks to join will have no interest in many of the matters in dispute between the husband and wife. Joinder would require them to deal with considerable amounts of material and evidence not relevant to the discrete issue to which they are interested. Doing so is likely to be “onerous and cumbersome” for the individual shareholders.

17. The Noteholders argued that they would be prejudiced if they are formally joined. Senior counsel for the Noteholders argued in their case outline that:

    59. … if joined, it would be incumbent on the [Noteholders] as parties to the proceedings to review all of the voluminous correspondence, attend all case management and interlocutory hearings and attend the final hearing…notwithstanding that most of the correspondent and most of those hearings may have limited bearing on their interests. This would cause the [Noteholders] to incur substantial legal costs in circumstances where it would be unlikely that [they] could assist the Court in the resolution of the majority of the issues raised…

18. It was argued that any prejudice otherwise arising from the burden of joinder could be avoided in a number of ways without joinder. First, by requiring the wife to plead her claims against them and identify the evidence in support. Doing so would put the third parties, the Court, and the husband on proper notice, thus affording the third parties procedural fairness without imposing on them the onus or cost associated with being joined as a party to the proceedings. I do not see how ordering a pleading would obviate the need for joinder. As Warnick J commented in Wayne (above at [51]) greater particularisation is likely to favour joinder. Secondly, it “would be open to the Court to grant leave for the [Noteholders] to make submissions and file evidence on those points”, which may affect their rights at the appropriate time (Noteholders’ case outline, paragraph 50). I see no force in this argument either. It is another aspect of third parties being parties in all but name.

19. The Noteholders also argued the question of their joinder was premature. They submitted that the wife has not demonstrated why it is necessary to join their clients at present in order to determine “all issues in dispute in the proceedings” in circumstances where the issues affecting the third parties are likely to be discrete, and that will only become relevant in circumstances where the relief sought by the wife, with respect to the shares, enliven the pre-emptive provisions in the Shareholders’ Agreement and the Note Subscription Agreement. It was argued that while it may become necessary in the future for the Noteholders to be joined to the proceedings, to do so now would be premature.

20. I do not accept that joinder of a third party is only necessary where that party has an interest in respect of all issues. It is not uncommon in a case with numerous parties for some of them to have an interest in a limited number of issues. The requirement of the rule to compel joinder is to enable the Court to determine and dispose of all issues in the proceedings. The presence of a third party may be necessary as a party only for some issues as part of this process. Nor do I think the question of joining the Noteholders is premature. The trial is listed to commence in February 2023. The present formulation of the wife’s claim discloses the area of debate where the interests of the Noteholders are relevant and could be affected. If they should be joined, it is appropriate for this to happen as soon as possible.

21. The wife pointed to a number of possible sources of prejudice to her if the third parties are not joined. It exposes the wife to the risk that the orders of this Court, which are intended to be binding on the third parties, may not be enforceable in the event of insolvency as it leaves open the argument that the third parties were not afforded procedural fairness as they were not joined as parties, irrespective of their level of participation in the proceedings or their desire, or in this case, lack of desire, to be joined. Senior counsel for the wife took me to In the matter Glenvine Pty Limited (2020) 160 ACSR 473 and In the matter of ZH International Pty Ltd (in liquidation) [2022] NSWSC 2 in which such an argument was successfully advanced. Senior counsel for the wife argued that while at present there is no argument of imminent liquidation, there is a risk of there so being if the third parties are not joined, and as small as that risk is, that risk is sufficient to sway the Court towards joinder if all else is neutral. While this may be true, as a form of prejudice I find it to be remote and not persuasive on the question of joinder.

    Conclusion

22. In relation to the Shareholders, it is difficult to see how their interests are not clearly aligned with those of F Limited. They do not wish to be joined, and while this does not prevent their joinder, it is a factor which I take into account. F Limited has agreed to represent those Shareholders in the proceedings.  Practical injustice will be avoided by F Limited advocating for its own interests and those of its shareholders, who will thereby be afforded procedural fairness. If the shareholders are all joined, this will create case management problems because of the unwieldy number of parties in the proceedings and the necessity for all procedural orders to accommodate this reality. It is unnecessary for each shareholder to be provided with copies of all the material served on and between parties to the proceedings. I accept joinder would be unnecessarily onerous for the individual shareholders.  For this reason I am unable to conclude their participation as parties “is necessary to determine all issues in dispute in the proceedings”. I decline to join those Shareholders. The same conclusion applies to F1 Pty Ltd and F2 Pty Ltd for the same reasons. However, to avoid doubt, I do not include the shareholders who are in the Noteholders group in this conclusion.

23. In relation to the Noteholders, the position is different. There is no single entity who can represent their interests. Since they are Noteholders, and financiers to F Limited, or shareholders who wish to appear for themselves, it is not possible to conclude that their interests and those of F Limited are aligned. The fact that the shareholders in this group have sought to align themselves, at least to resist joinder, with noteholders permits the inference that they see their interests as distinct from the other shareholders. Indeed, if the Court is persuaded to consider orders, pursuant to s 90AE, for significant interference with the terms of the Shareholders’ Agreement and the Note Subscription Agreement, it is at least foreseeable that the husband, F Limited, and the Noteholders may be in opposing interests. This is primarily because the proposed orders of the wife in alternatives “A” and “B” would potentially trigger default by F Limited and change of control as between the husband and F Limited.

24. In my view, the proposal made by the Noteholders set above at [64]–[65] highlights an air of artificiality in the position they take. They suggest a pleading should be prepared, that they file evidence, and make submissions. However, if those steps were taken, they would in most material respects be in the same position as parties but claim somehow they would save the cost of being parties. I do not accept this argument.

25. Although the wife does not makes claims of any wrongdoing against any of the third parties, her proposed alternatives “A” and “B” could have very significant consequences for the Noteholders, as explained above. There are millions of dollars, and possibly the financial position of the F Group, at stake. In those circumstances it would be very important that, if any orders are made affecting the interest of the Noteholders, the Noteholders are clearly bound.

1. The requirement for the Court to reach conclusions about such matters as the reasonable appropriateness of the proposed orders (s 90AE(3)(a)), the justice and equity of proposed orders (s 90AE(3)(d)), and to take account of their taxation effect and the economic, legal, or other capacity of the Noteholders to comply (s 90AE(4)(b) and (f)) point strongly to the likelihood of complex expert evidence and possibly complex evidence from the Noteholders themselves.

2. The fact that s 90AE issues may appear largely discrete from other issues in the matrimonial cause between the spouse parties does not mean that at present they can be treated as entirely separate. For example, the conclusion required by s 90AE(3)(a) is that the orders are reasonably appropriate “to effect a division of property between the parties to the marriage”. Consequently, the overall division of property between the spouse parties is inevitably connected to and bears upon the exercise of the powers in s 90AE. So does the question of whether orders are just and equitable (s 90AE(3)(d)). The Shareholders or Noteholders may decide they should cross examine the wife or experts about, and make submissions about, the overall division of property. It would be unusual for non-parties to be permitted to cross examine parties, and the very fact they may apply to do so begs the question of why they should not be joined. F Limited can protect the interests of the Shareholders in this regard, as a party. On the other hand, the Noteholders would likely need to be joined to cross examine. None of the proposals made by the Noteholders addresses this potentiality, other than the suggestion of premature joinder. However, that suggestion itself concedes the potential of the Noteholders being necessary parties. In any event, it is more efficient in my view for any joinder issues to be settled well ahead of the trial.

3. These considerations in my view lead to the conclusion that the participation of the Noteholders as parties is necessary, and they should be joined. I will order their joinder.

4. This does not inevitably mean they must participate in all aspects of the hearing of the issues. The Noteholders can form their own view about the extent to which they participate. However, although they presently disavow any need to involve themselves in a number of issues between the husband and the wife, such as contributions during the relationship, it is open to them as parties to seek to cross examine the husband and the wife and to make submissions on such issues as part of their resistance to any orders binding them pursuant to s 90AE.

5. I see no purpose in ordering a pleading at this stage. Senior counsel for the wife made clear the nature of the relief sought against the third parties (above at [35]). However, this does not preclude a later conclusion that a pleading should be ordered.

6. I am inclined to make no order as to costs in respect of this application.

I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper.

Associate:

Dated:       4 November 2022

Schedule 1: Proposed Parties to be joined

Respondent	Name
1	5	F1 Pty Ltd
2	6	F2 Pty Ltd
3	7	F3 Pty Ltd
4	8	F4 Pty Ltd
5	9	O Investment Fund, acting in respect of and for the account of its sub-fund O LL Fund
6	10	K2 Pty Ltd
7	11	K Pty Ltd
8	12	L4 Investments LLC
9	13	L5 Investments LLC
10	14	L6 Investments LLC
11	15	L7 Investments LLC
12	16	L8 Investments LLC
13	17	L9 Investments LLC
14	18	L10 Investments LLC
15	19	L Investments Limited
16	20	L1 Investments LLC
17	21	L2 Investments LLC
18	22	L3 Investments LLC
19	23	Q Pty Ltd
20	24	Mr P
21	25	R Pty Ltd
22	26	S Pty Ltd
23	27	Mr T
24	28	U Pty Ltd
25	29	V Pty Ltd
26	30	W Pty Limited atf Trustee for W2 Super Fund
27	31	Mr AA
28	32	AB Pty Ltd
29	33	Ms AC
30	34	AD Pty Ltd
31	35	Mr AE
32	36	AF Pty Ltd
33	37	Ms AG
34	38	Mr AH & Ms AH
35	39	AJ Pty Ltd atf AJ Super Fund
36	40	Mr AK
37	41	Ms AL
38	42	AM Pty Ltd
39	43	Ms AN
40	44	Ms AO
41	45	Ms AP
42	46	Ms AQ
43	47	AR Super Fund Pty Limited
44	48	Ms AS
45	49	Mr AT
46	50	AU Superannuation Pty Limited atf AU Superannuation Fund
47	51	AV Pty Ltd atf AV Trust
48	52	Mr AW
49	53	Ms AX
50	54	AY Investments Pty Ltd
51	55	Mr AZ
52	56	Mr BA
53	57	BC Pty Limited atf BC Superannuation Fund
54	58	Ms BD
55	59	Ms BE
56	60	Mr BF
57	61	Ms BG
58	62	BH Superannuation Fund Pty Limited
59	63	BJ Pty Limited atf BJ Trust
60	64	BK Pty Limited
61	65	BL Pty Limited  atf BL Superannuation
62	66	BM Pty Limited atf The Sutton Family Trust
63	67	BN Pty Limited
64	68	BO Pty Limited
65	69	BP Pty Limited  atf AG Family Trust

Schedule 2: Shareholders

Respondent	Name
1	23	Q Pty Ltd
2	24	Mr P
3	25	R Pty Ltd
4	26	S Pty Ltd
5	27	Mr T
6	28	U Pty Ltd
7	29	V Pty Ltd
8	30	W Pty Limited atf Trustee for W2 Super Fund
9	31	Mr AA
10	32	AB Pty Ltd
11	33	Ms AC
12	34	AD Pty Ltd
13	35	Mr AE
14	36	AF Pty Ltd
15	37	Ms AG
16	38	Mr AH & Ms AH
17	39	AJ Pty Ltd atf AJSuper Fund
18	40	Mr AK
19	41	Ms AL
20	42	AM Pty Ltd
21	43	Ms AN
22	44	Ms AO
23	45	Ms AP
24	46	Ms AQ
25	47	AR Super Fund Pty Limited
26	48	Ms AS
27	49	Mr AT
28	50	AU Superannuation Pty Limited atf AU Superannuation Fund
29	51	AV Pty Ltd atf AV Trust
30	52	Mr AW
31	53	Ms AX
32	54	AY Investments Pty Ltd
33	55	Mr AZ
34	56	Mr BA
35	57	BC Pty Limited atf BC Superannuation Fund
36	58	Ms BD
37	59	Ms BE
38	60	Mr BF
39	61	Ms BG
40	62	BH Superannuation Fund Pty Limited
41	63	BJ Pty Limited atf BJ Trust
42	64	BK Pty Limited
43	65	BL Pty Limited  atf BL Superannuation
44	66	BM Pty Limited atf The Sutton Family Trust
45	67	BN Pty Limited
46	68	BO Pty Limited
47	69	BP Pty Limited  atf AG Family Trust

Respondent	Name	Role
1	7	F3 Pty Ltd	Noteholder/Agent
2	8	F4 Pty Ltd	Security Trustee/ Noteholder
3	9	O Investment Fund, acting in respect of and for the account of its sub-fund O LL Fund	Noteholder
4	10	K2 Pty Ltd	Noteholder
5	11	K Pty Ltd	Shareholder
5	12	L4 Investments LLC	Noteholder
6	13	L5 Investments LLC	Noteholder
7	14	L6 Investments LLC	Noteholder
8	15	L7 Investments LLC	Noteholder
9	16	L8 Investments LLC	Noteholder
10	17	L9 Investments LLC	Noteholder
11	18	L10 Investments LLC	Noteholder
12	19	L Investments Ltd	Shareholder
13	20	L1 Investments LLC	Shareholder
14	21	L2 Investments  LLC	Shareholder
15	22	L3 Investments  LLC	Shareholder

Schedule 3: Noteholders