KRAUS & KATURAS
[2019] FCCA 1133
•1 May 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KRAUS & KATURAS | [2019] FCCA 1133 |
| Catchwords: FAMILY LAW – Application to join wife’s 94 year old mother as a party to property proceedings – failure by husband to particularise his claim dispute multiple requests and opportunities to do so – competing prejudice. |
| Legislation: Family Law Rules 2004 (Cth) r.6.03 |
| Cases cited: Bishop and Bishop [2003] FamCA 240 |
| Applicant: | MR KRAUS |
| Respondent: | MS KATURAS |
| File Number: | MLC 2795 of 2017 |
| Judgment of: | Judge Harland |
| Hearing date: | 15 April 2019 |
| Date of Last Submission: | 15 April 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 1 May 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Lennon |
| Solicitors for the Applicant: | Lennon Lawyers |
| Counsel for the Respondent: | Ms Johnston |
| Solicitors for the Respondent: | Dwyer & Co Solicitors |
| Counsel for the Proposed Second Respondent: | Mr Edmunds |
| Solicitors for the Proposed Second Respondent: | Dimos Lawyers |
ORDERS
That the Interim Orders sought by the husband in his amended initiating application be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Kraus & Katuras is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2795 of 2017
| MR KRAUS |
Applicant
And
| MS KATURAS |
Respondent
REASONS FOR JUDGMENT
This is an application by the applicant husband to join the wife’s mother as a respondent to the proceedings. Initially he sought to join the wife’s parents but subsequently the wife’s father died. The orders he seeks in support of this are set out in his amended initiating application. He erroneously refers to r.6.03 of the Family Law Rules 2004 instead of r.11 of the Federal Circuit Court Rules 2001. In his initiating application the husband says the parties started cohabitating in … 2010, married on … 2011 and separated on 8 November 2015. The parties’ twins were born on … 2015. The wife says they met in … 2009 and married on … 2010. She agrees they separated on 8 November 2015.
The husband commenced the proceedings on 23 March 2017 seeking unparticularised property orders and parenting orders.
In his first affidavit he refers to he and the wife living in the property owned by the wife’s parents at Property A (“the Property A unit”). The wife’s parents lived in the other unit on the same block. He refers to applying insurance monies he received of approximately $120,000 to renovating that home and paying for IVF treatments. He also refers to a period of living with the wife’s parents while the renovation works were being carried out between … 2012 and … 2013. Significantly the husband does not make any reference to having any sort of equitable interest in the property owned by the wife’s parents as a result of those works. The focus of his first affidavit is on the parenting issues in which he was seeking interim orders. His financial statement does not disclose any property interests apart from having $500 in a bank account. He does not disclose having any superannuation entitlements.
In her responding material the wife does not address property issues at all. Her initial affidavit does refer to living in the property owned by her parents and she states that the parents agreed they could live in the property rent free so she could be close to them and receive their support. She refers to providing the husband with significant care due to the husband’s mobility problems. His right foot was amputated in 2003 and his left foot was amputated in 2011. She did not file a financial statement. On the first return date 26 April 2017, I made interim parenting orders by consent as well as various other directions including listing the case for trial on 2 & 3 August 2018. The parties agreed to further interim parenting orders when they next came before me on 13 November 2017. The Husband represented himself on that occasion. On 26 June 2018 I made consent orders in Chambers vacating the final trial dates and re-listing it to July 2019. When it came before me on 12 November 2018 the property dispute was discussed with the wife’s Counsel stating that the wife’s case is that there is negative property. She says they did some renovations to her parent’s property in exchange for living there rent free.
The husband filed an amended initiating application on 5 September 2018. He still did not specify what final property orders he sought. He sought interim orders seeking to join the wife’s parents to the proceedings and sought an injunction against them dealing with the Property A unit.
In his affidavit also filed on 5 September 2018 the husband says that the wife told him that her parents didn’t want them to live in rented accommodation and wanted them to move in with them. They have two units on the same block. He says he was told by her and her parents that one of the units was theirs and they could do whatever they wanted with it. He sets out a conversation at paragraph 11 which he alleges he had with the parents. He does not specify when he alleges that conversation took place and does not provide any context for that conversation.
The husband says that the unit that was intended for them was uninhabitable and that they needed to carry out extensive renovations. They moved in with the wife’s parents whilst they carried out the renovations. The husband said he undertook renovations with his brother and his best man and sets out various tasks he claims he did.
The husband refers to there being urgency to his application as the wife told him the previous week that her father was ill and would need to be admitted to a nursing home. Her parents were going to provide the former matrimonial home as a bond required by the nursing home. He instructed his solicitors to lodge a caveat over the property. His affidavit is silent as to why he did not raise this previously despite having commenced the proceedings over a year before.
His first solicitor filed a notice of withdrawal on 10 November 2017. The husband then acted for himself until his current lawyers filed a notice of address for service on 13 February 2018. Given that the husband still did not file this application seeking to join the wife’s parents for over a further six months, it cannot be inferred that it was as a result of obtaining different legal advice in recent times.
The wife filed an amended response on 7 November 2018 which addressed financial issues although she also failed to particularise the property orders she sought. She also filed a financial statement. She deposes to having a car worth $12,000, household contents of $5,000 and modest superannuation, being less than $16,000 and discloses having liabilities totalling $71,354.74 for an overdraft for the business the parties had and credit card debts. The wife says they started a business in 2012. They took out an overdraft in 2013 because of cash flow problems.
The wife filed a further affidavit on 7 November 2018. The wife says that the unit they lived in was her parents’ investment property. Before they moved in they had had a tenant living in the house for 30 years. She says that she was not present for any conversation between the husband and her parents with respect to the representations the husband alleges they made and further says that neither the husband nor her parents have ever mentioned any such conversation to her. Annexure K-1 to her affidavit is a letter from her lawyers to the husband’s lawyers dated 17 October 2018 which asks for further and better particulars with respect to the alleged conversations referred to in his affidavit. The wife’s case is that they carried out some renovations in exchange for living there rent free.
On 12 November 2018 I ordered the applicant to serve the proposed second and third respondents with his amended initiating application and affidavit in support and directed that the proposed second and third respondents file and serve a response to the application on or before 21 January 2019.
The proposed second and third respondents were not served until 9 December 2018. The proposed second and third respondents filed a response on 21 January 2019 seeking that the application for joinder be dismissed and that the applicant do all acts and things to withdraw the caveat secured over the property. They also sought costs. In the alternative, if the Court determined they should be joined they sought orders including that the applicant file and serve a statement of claim particularising the claims against them with specific relief sought against them and a timetable for filing defences and replies.
On 3 December 2018 I made interim consent orders in Chambers requiring the parties to exchange various financial documents including documents with respect to the renovations of the Property A unit.
In addition, the wife’s lawyers sought particulars and documentary evidence with respect to the alleged condition of the property at the time of the renovations. They wrote a further letter on 30 October 2018 noting that they have noting they had received no response to the request for particulars and disclosure.
The wife’s mother filed an affidavit in support of her response. Her husband was also due to file an affidavit that day but collapsed and was sedated in hospital. Sadly, he later passed away.
She says that she and her husband have owned the land at Property A since … 1966. She says the land has always been unencumbered. She and her husband have always lived in unit two. The unit one was rented out for about 30 years prior to the husband and wife moving into that property.
She says that in or about 2012 she and the husband told the parties they could live in unit one rent free so that they could save money rather than renting, provided they would be responsible for paying the council rates and water rates. She denies that she or her husband ever told them that unit one was theirs.
She also denies that unit one was uninhabitable. She accepts that renovations were undertaken before the parties and their children moved in. She says that the parties told her and her husband that they wanted to modernise the kitchen and bathroom before they moved in. She says they told them that they could and that they could live with them whilst those renovations were being carried out. She says there was some renovation works that she and her husband requested be done which they paid for including installing a bath and shower vanity mirror, gait, heating, plumbing, built-in cupboard and installing a security door. She annexes a bundle of invoices, several of which were addressed to her husband Mr B. A few are addressed to Ms Katuras and to Ms Katuras. I assume this is the same person. She also annexes a copy of the title search which refers to the caveat lodged by the husband on the grounds of an implied, resulting or constructive trust. She denies that the husband has any basis for making that claim.
Exhibit A is a letter from Dimos Lawyers dated 20 March 2019. The letter specifically requests that the applicant file a further amended initiating application deleting the reference to the wife’s father, now deceased, and annexing a statement of claim setting out the relief sought against the wife’s mother in the event she is joined as a party. The letter also stated that in the event she is joined as a party then the trial set down for 13 and 14 June 2019 would need to be vacated. There was a follow-up email dated 12 April 2019 noting that no reply had been provided in referring to a previous letter following up on 8 April 2019. Dimos Lawyers ask if the applicant intends to file a further amended initiating application and statement of claim.
On 12 April 2019 the applicant filed his third amended initiating application which still failed to particularise the final orders sought. He sought to be excused from particularising his orders pending a retrospective and current valuation being obtained for the property at Property A. The applicant sought interim orders deleting reference to the wife’s father with respect to the joinder application and the injunction seeking that the parties attend mediation with an agreed mediator prior to 1 June 2019.
In addition to the amended initiating application the applicant filed two further affidavits. The first is from the husband’s psychiatrist with respect to the parenting issues which have now resolved on a final basis. The second is an affidavit of Mr C filed on 15 April 2019, the morning of the interim hearing.
Mr C is a carpenter. He says that he was hired by the husband to undertake renovation works in late 2012, early 2013. He says the house was run down and that he carried out renovations including pulling up carpet, renovating the bathroom, kitchen, hallway and dining area and other works. He makes no reference to the time spent or cost involved in carrying out that work. He claims that the husband was present and assisted and directed them. He says that from the conversations he had with the husband and wife he understood that the house was going to be theirs and that they were going to move in after the renovations. He does not particularise what these alleged conversations were.
The applicable law
Rule 11.01 of the Federal Circuit Court Rules 2001 (Cth) requires any person whose participation is necessary in order for the court to finally determine all matters in dispute in the proceedings be joined as a party.
Rule 11.02 permits a party to include another person as a party by naming that person in the application, response or reply and serving that document and all other relevant documents on that person. A party may not join another person to the proceedings after the first return date without the leave of the court.
There is no restriction on when a joinder order can be made during the course of pending proceedings. In the case of Bishop and Bishop [2003] FamCA 240, the applicant sought to join the husband’s parents and associated entities as parties in the midst of a part heard trial. In that case the Full Court allowed an appeal by the wife against the trial judge’s refusal to join the husband’s parents and associated entities in circumstances where the proposed parties were asserting that the husband and wife are indebted to them. Southwell and Jane (No 2) [2011] FamCA 734 is another example of a joinder issue arising during the course of a final hearing. In that case an issue arose about the husband having a loan account in his favour in a family discretionary trust and as a result, the wife sought to join the corporate trustee of the discretionary trust.
The circumstances of this case are different to those two cases quoted above. In this case the husband has provided no explanation as to why he did not seek the joinder of the proposed second respondent earlier. Despite being requested to provide a statement of claim particularising the claim against the proposed second respondent the husband has failed to do so. This is further compounded by the fact that the husband has still failed to particularise his claim generally. His failure is compounded by the fact that the wife’s lawyers sought particularisation on 17 October 2018.
It is all too common for parties to commence proceedings or file responses that do not particularise the nature of their claim and simply seek vacant orders that are “just and equitable” or “as the court determines”. Often parties seek leave to be excused from particularising their claim pending disclosure. Except in limited cases involving urgency parties should engage in negotiations and exchange disclosure documents before commencing proceedings. It is a rare case indeed where a party genuinely is not in a position to particularise their claim in their initiating material. It is incumbent upon parties to make out their case. It is not for the court or the other party to guess what the case is about.[1]
[1] See the discussion about this issue in my article The Role of Lawyers in the Administration of Justice in the Federal Circuit Court”, Australian Family Lawyer, Vol 25/3, October 2016, 13 to 22
Goodwin & Goodwin [2018] FCCA 385 is a decision of Brown J where he was asked to determine an application to adjourn an upcoming trial to enable the wife to make an application to join the husband’s parents to the proceedings. Her failure to do so earlier was not due to any action on her own part, rather she made the application soon after receiving legal advice. The wife conceded that she could pursue her equitable claim in the Supreme Court of South Australia but relied on this court’s accrued jurisdiction. I refer to His Honour’s comments at paragraphs 51 to 56:
51. Accordingly, in these circumstances, he asserts that it is not in the interests of justice to allow an adjournment, which is either tactically motivated or referable to an error of judgment on the part of the persons advising the wife, as none of these matters are attributable to him. Therefore the granting of the adjournment will cause prejudicial delay to him and be otherwise out of keeping with the case management principles of the court generally.
52. Case management principles are important, particularly in a bust court. Their proper application allows the court to manage its business efficiently and cost effectively for the benefit of all. This is particularly so in a court such as this one, which has many calls on its resources, including from disadvantaged sectors of the community.
53. Accordingly, the court cannot blithely dismiss case management principles or too easily accede to adjournment and amendment applications, which can be attributed to the late changing news of tactical decisions being made in legal offices, at the last minute, due to inadequate preparation. In general terms, the court should not endorse late applications, which results in hearings being adjourned and court days wasted, without cogent reasons.
54. However, at the same time, the court cannot ignore its responsibilities to administer the law fairly, which after all is the ultimate aim of justice. It is not of assistance to litigants, and so the interests of justice generally, if litigants perceive their applications, for either adjournment or amendment, have been arbitrarily dismissed as a consequence of shibboleths offered up on altars consecrated to the Gods of Case Management. Every case requires an idiosyncratic consideration and a balancing of the various factors concerned.
55. In Aon Risk Services Australia Limited v Australian National University[2] French CJ said as follows:
“Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation.”
56. Essentially, the interests of justice, in terms of the interests of other users of the courts services, militate against the late adjournment of trials because they are wasteful and both disruptive and dismissive of the processes of the court itself.
[2] Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 189 [24]
His Honour’s comments reflect case management principles and the administration of justice and the High Court’s comments in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175.
The matter is listed for trial on 13 and 14 June 2019. If the husband is successful in his application for joinder then the trial will need to be adjourned in order to give the proposed second respondent proper opportunity to prepare for the trial.
It is incumbent upon litigants to properly pursue their claims. This is not a case where the husband has provided an explanation for not seeking the joinder issue earlier. Furthermore, despite being on notice and having multiple opportunities to particularise his claim he has failed to do so. It is worth referring to the comments of the Full Court of the Family Court in B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 at paragraphs 43 to 45:
43. In the usual run of applications for alteration of property interests or parenting orders, the fact of marriage or parenthood, accompanied, in respect of the former, by a history of contribution to and acquisition of, property and, in respect of the latter, evidence that relates to any aspect of a child’s interests, is sufficient to make the existence of a “cause of action” apparent. No pleading in the traditional sense is required to identify further facts material to the cause.
44. However, 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.
45. In Gould v Gould; Swire Investments Ltd (1993) FLC 92-434 Fogarty J (with Nicholson CJ and Finn J agreeing) said (at 80,451):
I conclude, consistently with Buckeridge and Barro, that the correct procedure, where an applicant in proceedings under the Family Law Act seeks relief against a person who is a stranger to the marriage or relationship, is to name that person as an additional respondent in the proceeding and set out the nature of the claim and the basis of it in the ordinary way in the application. (emphasis added)
The wife opposes the joinder of the mother to the proceedings and argues that they do not have an equitable interest in the property they lived in. The wife says there is a negative pool. Both parties are reliant on Centrelink benefits. She is paying off various matrimonial debts.
The husband does not have any means to satisfy any claims for costs by the proposed second respondent and the wife if he is unsuccessful in his argument. If the husband is successful in his joinder application but unsuccessful in his primary application at trial (which is yet to be particularised) then it will not be possible to compensate the first and proposed second respondents by way of costs order.
The husband has been invited by the proposed respondents on three occasions to particularise the claim sought and to provide documents in support. He has failed to do so without any satisfactory explanation and even in his third amended initiating application fails to particularise his claim. He has filed the affidavit of the carpenter but that affidavit does little to advance his case as it does not provide any particulars of costs incurred and value of the work.
It is necessary for the court to weigh up the potential prejudice to the husband, the wife and the proposed second respondent.
It is significant that the husband has had ample opportunity to properly particularise his claim against the proposed second respondent and has failed to do so. It is not enough to simply refer to a couple of paragraphs in an affidavit and the details of any claim and the relief sought to be revealed at trial.
I do not accept the husband’s argument that he has been unable to particularise his claim without a retrospective and current valuation being carried out on the property owned by the wife’s mother. The expense of obtaining those valuations cannot be justified without the husband providing particulars of his equitable interest in that property. His material falls far short of that.
The husband’s solicitor made passing reference to the husband needing to pursue a claim in another court. That would have more merit if the husband had articulated his claim. Whilst it is not disputed that the parties carried out some renovations on the property owned by the proposed second respondent, the extent, cost and value of those works are in dispute. It is also apparent that whilst the parties carried out those works on that property they had the benefit of living in that property for several years without needing to pay rent.
If the husband’s application is dismissed the prejudice to him is his inability to pursue a claim against the proposed second respondent in this court. Litigants need to be given the opportunity to articulate and prosecute their claims. They need to be given the opportunity to be heard. The key concept here is opportunity. It is up to a litigant to take up that opportunity. They are not entitled to exercise this whenever they choose.
There is no suggestion in the husband’s material that he has only recently become aware of his ability to make a claim against the proposed second respondent. He does not give any adequate explanation as to his failure to particularise his claim and provide disclosure documents as requested despite receiving multiple requests that he do so.
If his application is granted then the trial will need to be vacated. The trial date has been vacated once before. Given the listing pressures in this court it would not receive another trial date this year. If successful then the proposed second respondent will incur further expense in meeting the claim and will need to be involved in the trial. At this stage she does not know what that claim is. Given the husband’s poor financial position and the fact that on the state of the evidence the issue for the parties will be the allocation of debt, this is not a case where the prejudice to the respondents can be cured by a costs order.
I consider that the prejudice to the wife and her mother outweighs the prejudice to the husband. I dismiss the husband’s application to join the wife’s mother as the second respondent in these proceedings.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Harland
Date: 1 May 2019
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