King & King

Case [2021] FamCA 603

FAMILY COURT OF AUSTRALIA

King & King [2021] FamCA 603

File number(s): MLC 9554 of 2011
Judgment of: HARTNETT J
Date of judgment: 13 August 2021
Catchwords: FAMILY LAW – PROPERTY – third party respondents removed from proceeding – lack of evidence – no compliance with orders to prosecute the case – no proper legal basis for joinder.  
Legislation: Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Cases cited: B Pty Ltd & Ors & K & Anor (2008) FLC 93-380
Kioa & West (1985) 159 CLR 550
Re Webster (1975) 132 CLR 270
Rigby & Kingston and Anor [2020] FamCA 415
Number of paragraphs: 56
Date of hearing: 19 July 2021
Place: Melbourne
The Applicant: In person
The First Respondent: In person
Counsel for the Second to Sixth Respondents (excluding the Fifth Respondent): Mr Allen
Solicitors for the Second to Sixth Respondents (excluding the Fifth Respondent): Knight Family Lawyers

ORDERS

MLC 9554 of 2011
BETWEEN: MS KING
Applicant
AND: MR M KING
First Respondent
AND: MR B KING
Second Respondent
AND: MR DD KING
Third Respondent
AND: KING INVESTMENTS PTY LTD (ACN …)
Fourth Respondent
AND: O PTY LTD (ACN …)
Fifth Respondent
AND: P PTY LTD (CAN …)
Sixth Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

19 JULY 2021

THE COURT ORDERS - by consent of the husband, not consented to by the wife:

1.That the Second, Third, Fourth and Sixth Respondents be removed as parties from the proceeding.

2.That within 14 days hereof the Applicant wife do all necessary acts and things to withdraw the caveat … placed by her over the properties at 1 M Street, Suburb G (Volume … Folio …).

3.That within 14 days hereof the Applicant wife do all necessary acts and things to withdraw the caveat no … placed by her over the properties at 2 M Street, Suburb G (Volume … Folio …).

4.That in default of the Applicant wife doing all acts and things and executing all such documents as are necessary to give effect to these orders, a Registrar of the Family Court of Australia at Melbourne be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the Applicant wife and to do all such acts and things necessary to give validity and operation to these orders.

5.That all extant applications be otherwise adjourned to a case management hearing before Justice Hartnett on the 15th September 2021 at 9.30am being in respect of outstanding property order applications of each of the Applicant wife and Respondent husband.

6.That the costs of the Second, Third, Fourth and Sixth Respondents as against each of the Applicant wife and Respondent husband be reserved.

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 17.02A(b) of the Family Law Rules 2004

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AGLC
King & King [2021] FamCA 603
Case
[2021] FamCA 603
Decision Date

CaseChat Overview and Summary

In this proceeding, Ms King (the Applicant wife) brought claims against Mr M King (the First Respondent husband) and several third parties, including Mr B King (Second Respondent), Mr DD King (Third Respondent), King Investments Pty Ltd (Fourth Respondent), and P Pty Ltd (Sixth Respondent). The dispute concerned the division of property, with the wife alleging that certain assets, including a warehouse property and rental income, were held on trust for the benefit of herself and the husband by the third-party respondents. The third-party respondents applied for summary dismissal of the wife's claims against them.

The central legal issues before the court were whether the wife's claims against the third-party respondents had reasonable prospects of success, or if the application was frivolous, vexatious, or an abuse of process. Specifically, the court had to determine if the wife had provided sufficient particularisation of her claims against the third parties, including the basis for allegations of constructive trust, unconscionability, unjust enrichment, dishonesty, fraud, and collusion. The court also considered whether the wife's application was made for the improper purpose of obtaining discovery.

Hartnett J found that the wife's claims against the second, third, fourth, and sixth respondents lacked the necessary particularisation and precision. The court noted that the wife had failed to provide material facts supporting her allegations, such as when, how, or by whom company funds were taken, the amounts involved, or how the funds were utilised by the respondents. Furthermore, the court observed that the wife had not prosecuted the matter with due diligence, referencing a history of non-compliance with court orders for disclosure and case management. Citing principles from *Kioa & West* and *B Pty Ltd & Ors & K & Anor*, the court emphasised the fundamental right of a party to know the case against them and the need for precision when joining third parties.

Consequently, by consent of the husband and by order of the court, the Second, Third, Fourth, and Sixth Respondents were removed as parties from the proceeding. The Applicant wife was ordered to withdraw caveats she had placed over two properties within 14 days, with a Registrar appointed to execute the necessary documents in default. All other extant applications were adjourned for a case management hearing. The costs of the removed respondents as against both the Applicant wife and Respondent husband were reserved.

Orders

Orders of the court

MLC 9554 of 2011

BETWEEN:

MS KING

Applicant

AND:

MR M KING

First Respondent

AND:

MR B KING

Second Respondent

AND:

MR DD KING

Third Respondent

AND:

KING INVESTMENTS PTY LTD (ACN …)

Fourth Respondent

AND:

O PTY LTD (ACN …)

Fifth Respondent

AND:

P PTY LTD (CAN …)

Sixth Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

19 JULY 2021

THE COURT ORDERS - by consent of the husband, not consented to by the wife:

1. That the Second, Third, Fourth and Sixth Respondents be removed as parties from the proceeding.

2. That within 14 days hereof the Applicant wife do all necessary acts and things to withdraw the caveat … placed by her over the properties at 1 M Street, Suburb G (Volume … Folio …).

3. That within 14 days hereof the Applicant wife do all necessary acts and things to withdraw the caveat no … placed by her over the properties at 2 M Street, Suburb G (Volume … Folio …).

4. That in default of the Applicant wife doing all acts and things and executing all such documents as are necessary to give effect to these orders, a Registrar of the Family Court of Australia at Melbourne be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the Applicant wife and to do all such acts and things necessary to give validity and operation to these orders.

5. That all extant applications be otherwise adjourned to a case management hearing before Justice Hartnett on the 15th September 2021 at 9.30am being in respect of outstanding property order applications of each of the Applicant wife and Respondent husband.

6. That the costs of the Second, Third, Fourth and Sixth Respondents as against each of the Applicant wife and Respondent husband be reserved.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

The historical material of the wife is that she works on a casual basis structuring her work arrangements around her parental responsibilities for the parties’ younger two children. The children do not spend any time with their father. The mother is earning approximately $440 a week gross and otherwise receives Centrelink benefits on a fortnightly basis. She lives in rental accommodation with the children, and the parties’ adult daughter, and has no savings. The husband has not met his obligations to pay spousal maintenance in accordance with orders made by Justice Cronin on 24 January 2012, and nor has he paid the various costs orders that have been made against him including a costs order on 7 July 2015 of $1250; a costs order on 2 August 2017 of $1250; and a costs order on 28 October 2017 in the sum $1647.47. Further costs orders in the total sum of $21,500 to be paid within 60 days were made by her Honour Justice Bennett on 8 February 2019. Those costs orders also remain outstanding. Background The parties married in 1994, for the first time, and separated in 1997. The parties then reconciled in 2000 and remarried in 2003. They separated for a second time in August 2011 and were divorced in 2019. During the period of the parties’ first marriage and between 1994 and 1998 the Respondent conducted a wholesale produce business. The corporate entity A Pty Ltd was registered in 2002 with the Applicant wife as the sole director and shareholder as claimed by the wife. The business run by that corporate entity was a wholesale business. The Respondent husband operated that business and mostly, as claimed by the wife, dealt in cash. It is the wife’s claim that in or about December 2002 a warehouse property situate at 2 M Street, Suburb G in the state of Victoria (the “2 M Street property”) was purchased for the sum of $220,000 by or on behalf of the husband and wife but registered in the name of the husband’s brother-in-law, the Second Respondent. The wife claims that the purchase price of $220,000 derived from funds provided by the husband. The husband denies this. Settlement for the property occurred on 19 December 2002. No mortgage was required with respect to the purchase of the property and it was unencumbered. The wife claims the husband told her he intended to operate the business A Pty Ltd from the property, and that the property was held in the name of his brother-in-law, the Second Respondent, for “asset protection” purposes. When the 2 M Street property was subsequently rented out, the rental income was, as claimed by the wife, paid to A Pty Ltd. Subsequently, from on or about 2006, the rental income was paid to the Second, Third and/or Fourth Respondents as claimed by the wife. The Fourth Respondent is a corporate trustee of a self-managed superannuation fund, the members of which are the Second and Third Respondents. The wife claims the rental income is held on trust by the Second, Third and/or Fourth Respondents on behalf of the husband and wife, and makes other claims in the alternative.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Respondents argued the legal basis for, and the facts alleged to support a finding of a constructive trust were not articulated by the Applicant. There was no allegation put nor evidence provided as to any alleged special disadvantage or vulnerability of the Applicant to support the ground of unconscionability nor was there any legal basis or material facts set out to support allegations against the Third Respondent of unjust enrichment, dishonesty, fraud and collusion with the First Respondent. Orders and Conclusion The Applicant has for a considerable time been on notice of the third parties’ seeking summary dismissal of her claim. The Applicant is also aware of the third parties’ contention that she should pay their legal costs incurred in the proceeding. Since 24 February 2020, the matter has not been prosecuted with due diligence by the Applicant or at all. Orders made in the proceeding have been as follows. On 24 February 2020 Chief Justice Alstergren made the following orders:1.The matter be adjourned to 20 May 2020 at 11am before Chief Justice Alstergren for a compliance mention.2.The transcript of the judicial mediation before Chief Justice Alstergren shall not be released.3.The Husband and Wife provide updated disclosure on or by 20 March 2020 including a list of documents and that list will identify the list of document already discovered.4.On or by 27 March 2020 each party including the 2 – 5 Respondents make available any documents that have not been discovered.5.On or by 9 April 2020, parties serve any additional request for discovery they allege that have not been made.6.On or by 30 April 2020, parties are to provide further disclosure of additional documents pursuant to order 4 herein.7.Each party file a brief description of no more than five pages as to how they put their case and indicate the critical document that they rely upon. On 20 May 2020 Chief Justice Alstergren made the following orders: 1.Within 7 days of these orders, the Applicant provide a succinct list of what the Applicant says should be disclosed.2.Within 14 days of these orders, the Respondent and second to sixth Respondent provide disclosure of the documents as particularised by the Application.3.Within 7 days of these orders, the Respondent and the second to sixth Respondents provide a succinct list of what they says should be disclosed.4.Within 14 days of these orders, the Applicant provide disclosure of the documents as particularise by the Respondent and second to sixth Respondents.5.Within 21 days of these orders, each party provide a new 8 page document that particularises how the put their case including critical documents they rely upon and failure to do so may result into a cost consequence.6.Any discoverable documents shall be made available at the offices of the second to sixth Respondents or the documents are to be provided electronically.7.Each solicitor is to provide to their party an outline as to cost spend on legal fees and an indication of costs shall be provided to the court at the adjourned date.AND THE COURT NOTES THAT:(A) This matter has been in the system since 2011.(B) The orders made on 24 February 2020 have not been complied with.

Ratio Decidendi

Legal Principle Established

The claims made by the wife are denied by the husband and the Respondents. Consideration The Respondents now make an application pursuant to rule 10.12 of the Family Law Rules 2004 (Cth) seeking summary dismissal of the Applicant’s claims against them on the basis that:(a)the application had no reasonable prospects of success. Rule 10.12(d); and/or (b)the application is frivolous, vexatious or an abuse of process. Rule 10.12(c). The Respondents submitted to the Court that the Applicant’s claim against them was vague. Neither the Applicant’s further amended initiating application dated 16 August 2019, nor summary of argument dated 19 June 2020, were sufficiently particularised. Both contained bare assertions which did not enable the Respondents to fully understand what was alleged against each of them. As the High Court stated in Kioa & West (1985) 159 CLR 550 at paragraph [16] page 552:It is a fundamental principle of justice that a person is entitled to know the case against him or her and to be given the opportunity to respond to it. Counsel appearing on behalf of the Respondents submitted further that any application against third parties required even greater precision and particularisation. He referred to a decision of the Full Court of the Family Court in B Pty Ltd & Ors & K & Anor (2008) FLC 93-380 wherein the Court stated, relevantly: ...the narrative or descriptive nature of evidence is often unsuited to formulate or particularise a cause of action against a third party. Something resembling a statement of claim will generally be necessary.[1][1] B Pty Ltd & Ors & K & Anor (2008) FLC 93-380 at [44]. Counsel for the Respondents submitted the Applicant had not provided to the Court the material facts upon which her claims against the Respondents were based. No particulars were given in relation to:(a)when, how or by whom money or property of A Pty Ltd in liquidation was taken;(b)the amount or value of any such money or property of A Pty Ltd in liquidation; and (c)when, how or by whom was that money or property of A Pty Ltd in liquidation utilised by the Respondents. Counsel noted that there was no evidence before the Court that either the Applicant or the First Respondent were shareholders in A Pty Ltd at the relevant time. It was argued by Counsel for the Respondents that it was open to the Court to conclude the Applicant’s application was made for the purposes of obtaining discovery in order to establish the basis of the claim. This is an improper purpose for joinder (Southern & Southern (2017) FamCA 128). The Full Court in B Pty Ltd & Ors & K & Anor found in relation to section 92AE(2):...what is contemplated is not some arbitrary invasion into the rights of a third party but an alteration of those rights where they are sufficiently connected to the division of a property between parties to a marriage.[2][2] B Pty Ltd & Ors & K & Anor (2008) FLC 93-380 at [113]. It was further submitted by the Respondents the Applicant provided no detail as to what was alleged to be the “existing asset pool of the parties”.