Kendall and Karas

[2013] FCCA 634

FEDERAL CIRCUIT COURT OF AUSTRALIA

KENDALL & KARAS [2013] FCCA 634

Catchwords:
FAMILY LAW – Property – transferred to Family Court of Australia.

Legislation:

Family Law Act 1975, s.106B

Family Law Rules 2004, r.7.01

Applicant: MS KENDALL

Respondent: MR KARAS

File Number: SYC 7163 of 2010

Judgment of: Judge Altobelli

Hearing date: 27 May 2013

Date of Last Submission: 27 May 2013

Delivered at: Sydney

Delivered on: 27 May 2013

REPRESENTATION

Counsel for the Applicant: Ms Pender

Counsel for the Respondent: Mr Campton

Solicitors for the Independent Children’s Lawyer Legal Aid NSW Sydney Central Family Law

ORDERS

1. Leave be granted to the Applicant to amend her application to join Ms K, Ms E and Ms S as further Respondents.

2. I direct the Applicant to further amend her application so that it particularises her claim against the further Respondents with such application to be filed and served within 28 days.

3. The Respondent’s costs of today be reserved.

4. The matter be transferred to the Family Court of Australia and listed before a Registrar on 8 July 2013 at 10:00am for directions.

IT IS NOTED that publication of this judgment under the pseudonym Kendall & Karas is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYC 7163 of 2010

MS KENDALL

Applicant

And

MR KARAS

Respondent

ORAL REASONS FOR JUDGMENT

1. On 24 May 2013, being the last business day before the commencement of a hearing that had been adjourned from last year on the basis that it was not reached, the applicant wife purported to amend her application to join in three further respondents, namely the husband’s partner, the husband’s lawyer and a Ms S.  So far as Ms K and Mr S is concerned, they are sought to be joined on the basis of a claim under s.106B of the Family Law Act 1975 that deals with transactions to defeat claims.  So far as the husband’s lawyer is concerned and subject to any claim for summary dismissal that might be made in the future, the claim is based on improper receipt of funds that the wife asserts were drawn contrary to the terms of Court orders.  The substantive proceeding relates to property settlement. 

2. The pool of property as presently constituted appears to be minor if not even negative.  The purpose of the wife’s exercise is to seek to enlarge the property pool.  The evidence that came before me this morning is listed in the case outlines for both the applicant wife and the respondent husband, and I will simply incorporate those lists into these my reasons.

3. The power to amend is conferred on the Court by r.7.01. An amendment at this very late stage of course raises many issues, including cost, and the inconvenience to the parties. This has to be balanced, of course, against the need to do justice to the wife. I adopted the procedure of giving each of the husband the wife the opportunity to have some short cross-examination of the evidence. The purpose of this was to see whether the wife in fact, as the husband asserts, received notice of the disposition of a boat and a motor vehicle.

4. The other purpose of the cross-examination was to get some sense of credit.  I wish to record in these ex tempore reasons that whereas I have formed certain impressions in the very discrete context of deciding whether or not leave should be granted, any comments that I make about the husband or the wife should not be construed as findings in respect of which an estoppel might be found.  As I say, the procedure was a very artificial one.  The counsel were time constrained and it would not be fair to say that they had the complete opportunity to test the evidence or to put their respective cases.

5. The approach that I have adopted in my mind is not, for example, to assess whether the wife’s claims against the third parties would be anything more than arguable.  I am satisfied on the evidence that I have heard and the material before me that the wife has an arguable case, and several times today I sought to reality test the case with her counsel and have sought to be reassured that they have properly considered the consequences of the course that they ask the Court to adopt.  In each case the Court has been reassured in the most positive and, indeed, confident of terms by the wife’s counsel that they have metaphorically counted the cost and, therefore, do understand what it is that they are doing.

6. There must be some doubts about the causes of action that are pursued against these third parties.  Nonetheless, granting leave to amend is not the same, in my opinion, as anything like a summary dismissal application and, in any event, as I say, they have established to my satisfaction there is an arguable case even if it will be a difficult case and perhaps, who knows, in the fullness of time may be a futile case as well.  The husband is of course inconvenienced.  Nonetheless, I have reserved his costs and if this matter is reviewed at some future time in another place it may well be that the costs order, albeit reserved, can be brought into play.

7. The husband has foreshadowed possible application for security for costs.  I am not sure whether that is on his own behalf or on the part of third parties, but that is a matter for another place at another time.  If I had been satisfied by the evidence that the wife had received the notice of the disposition of these assets that the husband asserts he gave rest assured I would not be granting the leave that I have.  There is no reason for me not to accept the wife’s evidence about not receiving the notices from the husband that he asserts were sent.

8. True it is there were some inconsistencies in her evidence, but none of which I find affect her credit in terms of her quite clear and consistent denials of receiving notice.  I must record for the benefit of the husband and those who advise him that my impression about his evidence is not nearly as positive as my impression about the wife’s evidence.  I am not the person who will be hearing this case.  My impression of his transactions in the post-separation period and in the period after injunctive orders were made would be that he behaved in a capricious manner.

9. The very nebulous relationship that he appears to have with people who provide him funds, including Ms K, now joined to these proceedings, are matters that are quite appropriate for the detailed scrutiny of a Court.  I am less confident about whether there is any legitimate role to join the husband’s solicitors.  I cannot see why this matter could not be dealt with by way of an add-back, but relying on and accepting on counsel for the wife’s representations that they have carefully considered the claim, and in circumstances where there are no other assets in respect of which an add-back would make any difference, I have nonetheless allowed that leave to be granted.

10. I make this observation that in relation to both the car and the boat – and it should be noted we are talking about very expensive items of personal property here – there is no evidence before the Court about market value.  So the assertion or the implication that both of these purchasers are bona fide who provided value is an untested one, and thus it is something that the wife is entitled to pursue at another time and in another place. 

11. My closing comments are that there is a certain air of futility in this litigation and that I would encourage both the husband and the wife to re-assess where they stand as regards this litigation and, in particular, to count the cost.  They each take risks - very, very substantial risks.  This litigation could easily continue for another year if not more.  Expectations need to be readjusted.  Is it realistic for the wife to expect payment from the husband in the amount that she seeks in circumstances where she completely agrees to the expenditure of vast sums of money completely disproportionate to the income and assets of the husband and the wife on the children’s education?

12. Is the wife undertaking a cause of action that ultimately may contribute to her children being taken out of the schools that she thinks it is so important for them to attend?  So far as the husband is concerned there seems to be a flexibility in his finances that the wife does not have.  Perhaps he should draw on that flexibility so that a sensible compromise can be reached, and so that a detailed scrutiny of his finances can be avoided.  One hopes that commonsense will prevail. 

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Date:  25 June 2013