Keskin and Keskin (No 2)

[2020] FamCA 1038

FAMILY COURT OF AUSTRALIA

KESKIN & KESKIN (NO. 2) [2020] FamCA 1038

FAMILY LAW – PRACTICE AND PROCEDURE – where this is a matter that has been remitted from the Full Court of the Family Court of Australia – where the original trial judge made findings as to the ownership of a company that formed part of the matrimonial property pool – where whilst the matter was the subject of a successful appeal the wife did not challenge the findings of the trial judge on this particular issue – where in the present defended re-trial of the matter the wife attempted to change her position and sought leave to file an Further Amended Response – where this was opposed by the husband – where counsel for the husband submitted that the wife was estopped from proceeding with her application based upon the principles of issue-estoppel – where the wife is not allowed to re-agitate the issue – where to permit the wife the ability to re-agitate the issue would cause significant injustice to the husband and second named respondent.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth) r 11.10

Blair v Curran (1939) 62 CLR 464

APPLICANT: Ms Keskin

FIRST RESPONDENT: Mr Keskin

SECOND RESPONDENT: Mr R Keskin

FILE NUMBER: MLC 9445 of 2014

DATE DELIVERED: 10 August 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 10 August 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bruno Kiernan

SOLICITOR FOR THE APPLICANT: MMH Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Tim Puckey

SOLICITOR FOR THE FIRST RESPONDENT: Pearsons Lawyers

THE SECOND RESPONDENT: In Person

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Keskin & Keskin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9445 of 2014

MS Keskin

Applicant

And

Mr Keskin

First Respondent

And

Mr R Keskin

Second Respondent

EX TEMPORE REASONS FOR JUDGMENT 

1. The proceedings in this matter have a long history including, relevant for the purposes of the matter I am required to determine, a final hearing before Wilson J and an appeal to the Full Court of the Family Court of Australia (“the Full Court”) from his judgment delivered on 19 June 2019.

2. On 27 July 2020 the wife filed an Amended Response to Initiating Application in which she sought inter alia the following orders:

   1. That pursuant to s 106B of the Family Law Act 1975 (Cth), the D Pty Ltd ACN … (D Pty Ltd) the following transactions be set aside:

   a.The  share  transaction  processed  by  ASIC  on  1  April  2015  (whereby  7  shares  in  D Pty  Ltd  were  issued  to  the  second  respondent)  be  set  aside  and  shareholding  to  revert  to original  status  at  time  of  separation  of  Husband  and  Wife.

   b.Any  agreements  after  5  May  2013  between  the  Husband  the Second  Respondent  in relation  to  ownership  of  D Pty  Ltd.

   c.Any  further  transactions  in  relation  to  D Pty  Ltd  between  the  Husband  and  the Second  respondent  after  1  September  2014.

   2.That the husband and the second respondent be restrained from issuing and transferring any further shares in D Pty Ltd, or changing the office holding of D Pty Ltd, until compliance with these Orders is complete.

3. The effect of those orders being to reinstate the husband as sole director and shareholder of D Pty Ltd excluding his father Mr R Keskin (“the second named respondent”) from any interest in the company. The wife further sought orders for the sale of the two real properties owned by D Pty Ltd and the division of the net proceeds between the husband and the wife similarly to the exclusion of the second named respondent.

4. The ownership of D Pty Ltd was an issue in the hearing before Wilson J. He referred in some detail to the wife’s case that the husband continued to own 50% of the equity in D Pty Ltd not 30% as alleged by the husband at that time, the other 70% being owned by the second named respondent. He also referred to the wife having told him that she did not wish to cross-examine the second named respondent about this issue. Although the wife did cross examine the husband about the issue, Wilson J ultimately preferred the husband’s evidence and found at paragraph 121 of his reasons for judgment as follows:

   On the question of whether and if so to what extent D Pty Ltd was an asset to be divided, in my view the answer is in the affirmative. But only 30% of the net shareholders’ equity was relevant as I find that the respondent and the respondent’s father in fact realigned their respective shareholding in D Pty Ltd following the cessation of litigation between the two.

5. Although the husband mounted a successful appeal against the orders of Wilson J, his finding with respect to the equity in D Pty Ltd was not the subject of that appeal. To the contrary the Full Court said commencing at paragraph 18 of their reasons for judgment delivered on 10 December 2019 as follows:

   18.This ground of appeal contended the primary judge erred by ordering the husband to pay to the wife the sum equal to 60 per cent of the net value of land owned by a private corporation. This ground must also succeed.

   19.In respect of the corporation which owned the land, the husband was found to hold 30 per cent of its shares and the second respondent was found to own the residual 70 per cent of the shares (at [114], [119], [121], [157]). Apparently, the only realisable assets of the corporation were two parcels of land in Suburb G. The spouses adduced discrepant evidence about the net values of the land, the reliability of which troubled the primary judge (at [113], [122]). Nevertheless, the aggregated net value of the land was assumed to represent the net value of the corporation’s shareholding (at [122]).

   20.Significantly, because the husband was found to only own 30 per cent of the shareholding, the primary judge understandably found “only 30 [per cent] of the net shareholder’s equity was relevant” to the dispute between the spouses (at [121], [122]). The primary judge then went on to find the wife was entitled to 60 per cent of the spouses’ property (at [173]), which property included the husband’s minority shareholding in the corporation.

   21.Despite those findings, the primary judge ordered the husband to pay to the wife the sum equal to 60 per cent of the net value of the land (Orders 3 to 5); not merely 60 per cent of the net value of the husband’s minority shareholding in the corporation, which would equate to only 18 per cent of the net value of the land (being the product of 60 per cent x 30 per cent of the net value). The error was obviously material to the orders because the 12 per cent differential amounted to $93,840 according to the husband and $118,740 according to the wife.

6. The wife not only did not challenge Wilson J’s findings when she filed an Affidavit on 8 May 2020 pursuant to the orders made requiring her to set out the orders she was seeking, she made no mention of the ownership of D Pty Ltd other than by reference to the need for the caveats to remain pending the final hearing and a determination of the ownership of the real properties. It was not until the wife filed her Further Amended Response that she sought orders which were contrary to Wilson J’s findings and significantly based not upon her case at the final hearing before his Honour that the husband still owned 50% of the equity in D Pty Ltd but on the basis of him owning 100%.

7. Counsel for the husband initially submitted that pursuant to r. 11.10 of the Family Law Rules 2004 (Cth) (“the Rules”) the wife required leave to amend her Response and that given the history of this matter leave should not be granted. Counsel for the husband ultimately submitted that the wife was estopped from proceeding with her application based upon the principles of issue-estoppel.

8. Whilst counsel for the wife submitted that the court has a discretion to permit the wife to amend her Response pursuant to r. 11.10 of the Rules he acknowledged that the issue-estoppel argument presented a greater hurdle to the wife not simply with respect to her being granted leave to file her amended response but with respect to the broader question of whether she should be permitted to re-agitate the issue with respect to the ownership of the equity in D Pty Ltd.

9. The second named respondent is unrepresented and did not add to the submission made on behalf of the husband other than to say that he wants the caveats lodged by the wife over the title to the real properties owned by D Pty Ltd removed.

10. The principles of issue-estoppel are well established. As Dixon J said in Blair v Curran (1939) 62 CLR 464 (“Blair”) [at pages 531-532]:

    A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.

    Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded.

11. There are as referred to by counsel for the husband cases which have questioned the application of the principles of issue-estoppel in this Court, however the question is one which has arisen primarily in relation to parenting cases in which the paramount consideration is the best interest of the child or children the subject of the proceedings.

12. The circumstances in this case are very different. The dispute in this case is one between the wife and a third party, not a party to the marriage, about the ownership of D Pty Ltd and is in my view akin to a commercial dispute. I am satisfied that the findings as to the ownership of D Pty Ltd made by Wilson J were as described by Dixon J in Blair “legally indispensable” to the conclusion that he reached as to the parties entitlements and disposed of that issue.

13. In circumstances where those findings were not challenged by the wife and have not been overturned on appeal I am satisfied that the matter has been disposed of and that the wife should not be permitted to re-agitate the issue. No basis has been submitted that would warrant her being permitted to do so and to allow her to do so would in my view cause a significant injustice to the husband and more importantly the second named respondent who is not a party to the marriage. That of course does not preclude the wife seeking orders with respect to the 30% interest Wilson J found was held by the husband which the husband asserts he has transferred to the second named respondent.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 10 August 2020.

Associate: 

Date:  10 August 2020