King & King

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

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

REASONS FOR JUDGMENT

HARTNETT J:

PRELIMINARY

1. On 19 July 2021 the Court had before it an application in a case filed 27 May 2021 seeking that the Applicant’s application against the Second, Third, Fourth and Sixth Respondents (“the Respondents”) be dismissed. In the alternative, an order was sought that the Respondents be removed as parties to the proceeding. As an ancillary order, the removal of caveats lodged by the Applicant was sought.

2. The application in a case did not refer to the Fifth Respondent, namely, O Pty Ltd, which is a corporate entity in liquidation.    

3. The Applicant wife (in the substantive, outstanding property orders proceeding) was the Respondent to the application in a case and appeared by Microsoft Teams, as sought by her as a litigant in person.  The wife’s former solicitors, Clancy & Triado, filed a notice of ceasing to act on her behalf on 1 April 2021. The Applicant filed no material in opposition to the application. She placed no evidence before the Court.

4. The Respondents were represented by Counsel. The evidence relied upon was as contained in an affidavit sworn by the Third Respondent, Mr DD King and was filed on 26 May 2021.

5. The Respondents argued that the wife’s amended initiating application dated 16 August 2019, contains no proper basis for her application against them and that nor does her summary of argument dated 19 June 2020.  They submitted there were no material facts provided by the Applicant to base her claim against the Second, Third, Fourth, Fifth and Sixth Respondents.  The company A Pty Ltd, a relevant corporate entity is now also is in liquidation. O Pty Ltd the Fifth Respondent, was placed into liquidation on 17 June 2020.

6. In support of the application in a case, a summary of argument filed on behalf of the Respondents on 6 July 2020, together with a further summary of argument filed on behalf of the Respondents on 21 December 2020, were relied upon.    

7. These proceedings have a long history in the Court. Proceedings were first commenced on 24 October 2011, as filed by the Applicant wife. The wife sought final property and parenting orders. After numerous hearings, final parenting orders were made by Justice Bennett on 25 September 2018. The property proceeding as between the parties remained extant.  In essence, the wife claimed in the property proceeding that the Respondents held the ownership of assets and/or were in control of assets which were the property of the husband and the wife. 

8. The Second to Sixth Respondents were joined as parties to the proceeding by order made by the Court on 14 July 2015 by Justice Bennett.

9. The property orders proceeding subsequently came before Justice Bennett on 11 December 2017, wherein she noted that it was common ground by all parties at the bar table that the property application was not in a state to proceed on that day. She concurred in that regard. The matter did not progress to finalisation.

10. Throughout the history of this proceeding it would appear that the husband has maintained his position that he has no cash reserves nor capital; and that he has historically and continuingly received money from his family to assist in the payment of his living expenses. The husband does not receive Centrelink benefits. He has no bank accounts registered in his name. He has since the separation of the parties in August 2011, never paid child support. On 12 October 2018 child support arrears as payable by the husband to the wife were approximately $21,164.71. The wife asserted in the proceeding that the husband was, in fact, self-employed and supporting himself in a wholesale business which was previously owned by A Pty Ltd.

11. 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

12. 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. 

13. During the period of the parties’ first marriage and between 1994 and 1998 the Respondent conducted a wholesale produce business.   

14. 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. 

15. 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. 

16. 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. 

17. 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. 

18. In 2005, the husband travelled to Country GG and arranged for two properties in the name of the wife’s parents to be transferred into the wife’s name. The wife’s parents continue to meet the expenses of the properties, and to receive the income from the properties.  The wife claims she holds these properties on trust for her parents. 

19. In or about June 2006 a property situate at 1 M Street, Suburb G was purchased for the sum of $270,000. It was registered in the name of the Second Respondent.  The wife claims this property’s purchase was paid for in full with cash from A Pty Ltd and no borrowings were again required. The wife claims that the property and the rental income derived from it are held on trust for the Applicant wife and Respondent husband. 

20. In 2007, the wife claims the husband negotiated on behalf of A Pty Ltd to obtain a lease for a retail business.  It was called “Retail A”. The shop was known as Shop F1. 

21. In 2010, the wife claims A Pty Ltd entered into a lease for another retail outlet known as Shop F2.  This outlet was called “Shop HH”.  The Applicant wife claims she was unaware of this lease during the marriage. 

22. In or about November 2010, without informing the wife as claimed by the wife, the husband transferred the business of Retail A to King Properties Pty Ltd, a company controlled by the Third Respondent. The wife claims the Third Respondent held the business of Retail A on trust for the husband and wife together with any profits derived from that business. In or about May 2013, King Properties Pty Ltd sold the business known as Retail A.  On or about 27 August 2013 the settlement of the sale of the business of Retail A took place with an amount of $520,000 being paid to King Properties Pty Ltd as claimed by the wife.  The wife claims the Third Respondent holds the proceeds of sale of the business on trust for the husband and wife. 

23. In or about 2010, the husband, without informing the wife as claimed by the wife transferred the business of HH Shop to Ms FF, a friend of the husband.  Ms FF subsequently transferred the business to King Properties Pty Ltd, a company controlled by the Third Respondent who is the Respondent husband’s sister.

24. On 11 February 2011 the Second and Third Respondents indicated a willingness in correspondence to the husband and wife, as claimed by the wife, to transfer the titles of the 1 M and 2 M Street, Suburb G together with the two liquor store businesses to the husband and wife in return for a payment from them in the sum of $222,176. 

25. In 2011, the husband purchased a property at T Street Suburb H for $565,000. The property was registered solely in the husband’s name as claimed by the wife. 

26. On 4 November 2011, liquidators were appointed for A Pty Ltd. A number of assets of A Pty Ltd were never accounted for and/or were sold by the husband as alleged the wife. 

27. On 7 February 2012, the husband signed a contract of sale for the purchase of a warehouse at EE Street, Suburb G.  The purchase price was $1,050,000.  In August 2012, settlement of the sale occurred. The property was at that time registered in the name of O Pty Ltd. O Pty Ltd was a company of which the Third Respondent was the sole director and shareholder. In August 2019, the property was sold for $1,610,000. That sale preceded the company’s liquidation in June of 2020. These are matters now for the liquidator.

28. The claims made by the wife are denied by the husband and the Respondents.

    Consideration

29. 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).

30. 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.

31. 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].

32. 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.

33. 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).

34. 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].

35. 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”. 

36. The Respondents submitted that:

    a)the Applicant had no interest in the 2 M Street property as there was no supporting evidence to demonstrate that an interest existed.  The Applicant had failed to establish any equitable interest nor provide disclosure to support her claim.  The material that had been deposed to by the Applicant in her affidavit provided inconsistent statements with regard to the purchase of the property, which undermined the establishment of the Applicant’s interest in the property;

    b)the Applicant had no interest in the 1 M Street property as there was no supporting evidence to demonstrate that an interest existed. The property was purchased and is solely owned by the Second Respondent;

    c)the Applicant had no interest in the total income of A Pty Ltd, in liquidation, as there were no supporting documents to establish that claim nor illustrate how the Respondents were in any way connected to A Pty Ltd in liquidation. This company was wound up and a liquidator’s report prepared;

    d)the Applicant had no interest in the 2 M Street property, as the letter alleged by the Applicant to support her claim in relation to this had not been signed by the Second and Third Respondents; and

    e)the Applicant had not made discovery of documents as ordered by the Court or at all, that supported her claims against the Respondents. 

37. In addition, the Respondents submitted that the Applicant cannot pursue a claim that is, in essence, a claim made on behalf of A Pty Ltd (in liquidation).  In the wind up proceedings in the Supreme Court of Victoria the liquidator of A Pty Ltd (in liquidation) did not seek to exercise any powers under the corporations law in relation to the Respondents. 

38. 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

39. 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. 

40. Since 24 February 2020, the matter has not been prosecuted with due diligence by the Applicant or at all.

41. Orders made in the proceeding have been as follows.

42. 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.

1. 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.

2. On 15 July 2020 Chief Justice Alstergren made the following orders: 

   1.The matter be adjourned to the Family Court of Australia before the Honourable Chief Justice Alstergren on 13 August 2020 at 9.00am for a compliance mention hearing.

   2.The Application in a Case filed on 13 July 2020 be referred to a Senior Registrar for hearing as soon as possible.

   3.Before the next adjourned date of 13 August 2020, the parties make any further disclosure required.

   AND THE COURT NOTES THAT:

   (A)In the event of non-compliance with order 3 above and previous Court orders for disclosure, the Court will consider make costs orders on the next adjourned date.

3. On 13 August 2020 Chief Justice Alstergren made the following orders: 

   1.The matter be adjourned to the Family Court of Australia before the Honourable Chief Justice Alstergren on 1 October 2020 at 9.00am for a compliance mention hearing.

   2.The matter be listed for a Conciliation Conference before a Senior Registrar on a date to be fixed in relation to outstanding disclosure issues.

   3.        Within 21 days of these orders, both parties file an affidavit of documents.

   4.Seven (7) days order 3 above, each party request a copy of the documents they do not already have in their possession, and these documents are to be provided electronically via email to the other party(ies), not filed with the Court.

   5.Seven (7) days after order 4 above, each party clearly identify the documents that have not been provided to them.

   6.The Applicant be granted leave to file and serve any response to the Case Summary Document filed by the 2nd, 3rd, 4th, and 6th Respondents on 6 July 2020.

   AND THE COURT NOTES THAT:

   (A)The Application in a Case filed 13 July 2020 is also referred to a Senior Registrar.

4. On 17 August 2020 the following orders were made: 

   1.The parties together with their lawyers attend a Conciliation Conference by way of a video hearing or as may be otherwise advised before the Senior Registrar on 6 October 2020 at 10:00am.

   2.That the Applicant pay the Conciliation Conference fee or obtain an exemption of such fee at least 28 days prior to the conference.

   3.That each party electronically submit a two page summary for the purposes of the conciliation conference to be emailed to … by 4.00 pm on 5 October 2020.

5. On 6 October 2020 Senior Registrar Hoult made orders as follows:   

   1.That on or before 20 October 2020 the Applicant wife file and serve a Statement of Claim in relation to each of the Respondents.

   2.That on or before 20 October 2020 the Applicant wife serve upon each of the Respondents a request for various documents and, on or before 4 November 2020, each of the Respondents reply to the request with either:

   (a)       a copy of the document as requested; or

   (b)       an explanation as to why the document is not provided.

   3.That on or before 3 November 2020, each Respondent file and serve a Response (defence) to the Applicant wife’s Statement of Claim.

   4.That all extant applications be adjourned to the Senior Registrar’s Duty List on 13 November 2020 at 10:00am.

   5.That the compliance hearing listed for 17 November 2020 before Alstergren CJ be vacated.

   6.That each party’s costs of this day be fixed in the sum of $3,500 and reserved.

6. On 26 October 2020 the wife’s then lawyers forwarded correspondence to the parties seeking an extension of time within which the Applicant might comply with the orders made by Senior Registrar Hoult on 6 October 2020. The First Respondent objected to such extension.  No material was filed by the Applicant wife in accordance with the orders made either within time or to the present time. 

7. On 16 November 2020 Senior Registrar Hoult made the following orders:

   1.That all extant applications be adjourned to the Senior Registrar’s Duty List on 15 January 2021 at 10:00am.

   2.That by no later than 21 December 2020 each party make, file and serve any further submission including a list of documents relied upon and, if practicable, a list pinpointing particular paragraphs of those documents.

   3.That each party’s costs of this day, save those of the First Respondent husband, be reserved.

8. On 15 January 2021 the following orders were made:

   1.That all extant applications be adjourned for interim defended hearing before the Senior Registrar on 2 February 2021 at 10:00am (“the adjourned date”).

   2.That the parties and their barristers attend Court in person on the adjourned date.

   3.That each party make, file and serve any further material upon which they intend to rely by no later than 4:00pm on 29 January 2021.

   4.        That each party’s costs be reserved.

9. On 11 March 2021 the following orders were made:

   1.        That judgment be reserved.

   2.That the matter be adjourned to the Senior Registrar’s Duty List on 1 April 2021 at 9:00am for the delivery of Orders and Reasons with each party and/or their legal representative to appear in person irrespective of COVID-19 restrictions.

10. On 6 April 2021 the following orders were made:

    1.        That all extant interim applications be dismissed.

    2.That this matter be placed in the list of cases awaiting allocation to a judicial docket with priority as and from the date of these orders.

    AND THE COURT NOTES

    A. That there are concerns about the way in which the Applicant wife has pleaded her case.

11. On 8 June 2021 the following orders were made:

    1.The Application in a Case filed on behalf of the Second, Third, Fourth and Sixth Respondents is adjourned to 19 July 2021 at 9.30AM before Justice Hartnett, when the matter is already listed before Her Honour.

    AND IT IS NOTED THAT:

    A.Senior Registrar Hoult found it appropriate that this application be determined by her Honour.

12. The Respondents submit there has been non-compliance by the Applicant with orders of the Court such that the Respondents remain unaware of the legal and factual basis of the Applicant’s claim against them.

13. The Applicant raises no opposition to the orders as sought by her non-filing of a response and affidavit and non-compliance with Court orders.

14. The application in a case shall be acceded to. The Applicant’s substantive application against the Respondents has no prospect of success and has become an abuse of process.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett.

Associate:

Dated:       13 August 2021