MacDougal and Benson and Ors

[2015] FamCA 552

FAMILY COURT OF AUSTRALIA

MACDOUGAL & BENSON AND ORS [2015] FamCA 552

FAMILY LAW – PRACTICE AND PROCEDURE – Disjoinder – where second respondent seeks the dismissal of orders sought against him by the respondent – consideration of whether appropriate to join second respondent personally or the company – complex litigation requiring finding of fact to be determined at final hearing - second respondent’s application is dismissed.

Family Law Act 1975 (Cth) s 90AE, 106B

B Pty Ltd & Ors v K & Anor (2008) FLC 93-380; 219 FLR 107
Bigg & Suzi (1998) FLC 92-799
Horton & Jones (No 2) (1939) 39 SR (NSW) 305
Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541
Pagliotti & Hartner (2009) 41 Fam LR 41
Pelerman & Pelerman (2000) FLC 93-037
Trawl Industries of Australia Pty Ltd (recrs and mgrs. Apptd) (in liq) and Ors v Effem Foods Pty Ltd (1992) 108 ALR 335

APPLICANT: Mr MacDougal

1st RESPONDENT: Ms Benson

2nd RESPONDENT: Mr Benson

3rd RESPONDENT: T Pty Ltd

INTERVENOR:

FILE NUMBER: MLC 1674 of 2013

DATE DELIVERED: 17 July 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Berman J

HEARING DATE: 19 June 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Campbell

SOLICITOR FOR THE APPLICANT: Forte Family Lawyers

COUNSEL FOR THE 1ST RESPONDENT: Mr Cummings

SOLICITOR FOR THE 1ST RESPONDENT: Lennon Mazzeo

COUNSEL FOR THE 2ND RESPONDENT:

SOLICITOR FOR THE 2ND RESPONDENT:

COUNSEL FOR THE 3RD RESPONDENT:

Ms Connor

Saxby Lawyers

Ms Lim

SOLICITOR FOR THE 3RD RESPONDENT: Altus Lawyers

Orders

1. That the application of the second respondent seeking the dismissal of the husband’s application for orders against him be dismissed.

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

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: MLC 1674  of 2013

Mr MacDougal

Applicant

And

Ms Benson and Mr Benson and T Pty Ltd 

Respondents

REASONS FOR JUDGMENT

INTRODUCTION

1. By Further Amended Initiating Application filed 23 April 2014, Mr MacDougal (“the husband”) seeks orders in respect of parenting issues relating to the three children of the relationship and settlement of property.  By her Amended Response filed 24 April 2014, Ms MacDougal (“the wife”) opposes the orders sought by the husband.

2. The proceedings are currently listed for final hearing on 10 August 2015.

3. Various orders have been made in an attempt to have the matter made ready for hearing.

4. Further trial directions were considered by Macmillan J on 27, 28 April 2015 and then on 1 May 2015.

5. As part of those hearings leave was given to join T Pty Ltd as a third respondent. Of more immediate moment is the determination of an application made for the disjoinder of Mr Benson as second respondent.

6. Her Honour was reserved on that aspect of the proceedings following submissions made orally and in writing.

7. The following is a summary of orders made on 27 April 2015:-

   (1)T Pty Ltd be joined as a party to the proceedings.

   (2)The husband file and serve on all parties including T Pty Ltd a Statement of Contention as to Fact and Law based upon which the husband asserts the wife to be the beneficial owner of the properties known as and situate at X Street, Suburb W (“the Suburb W property”) and K Street, Suburb S (“the Suburb S property”).

   (3)Liberty reserved to T Pty Ltd to apply on short notice to be removed as a party to the proceedings.

   (4)Other orders made nor relevant to the current application.

8. Macmillan J has now determined that she has an irreconcilable conflict in respect of the matter and it would not be proper for her to either determine the interim application or hear the trial generally.

9. The matter was called on before me on 19 June 2015 and on that occasion the husband, the wife, second respondent and third respondents were all represented.

10. Counsel were given a number of options but principally distilled to either that I rehear the oral submissions in respect of the disjoinder application or alternatively, that I would determine the matter on the documents currently filed.  To the credit of all parties, there now appears to be a willingness to do all things that will enable the proceedings to be heard and determined as currently listed.  Whilst not relevant to the application before me, by reference to the exhibits “H1” and “W1” as to the statement of costs pertaining to each of the parties, it would seem apparent that the extent of costs have the real potential to render any perceived victory as pyrrhic at best.

BACKGROUND

1. The parties are not agreed as to the make-up of the legal and equitable interests of the parties. In a balance sheet filed 19 May 2015, the husband includes the following items:-

   5.Loan to Mr Benson on 31/12/12 and 14/2/13  Company U  $400,000 the husband seeks that this debt be included in the wife’s assets if not recovered in these proceedings.

   20.K Street, Suburb S T Pty Ltd $420,000 held for the wife beneficially by T Pty Ltd.

   21X Street, Suburb W T Pty Ltd $240,000 held for the wife beneficially by T Pty Ltd.

2. The wife does not accept that she has any beneficial interest in either the Suburb S or the Suburb W properties and disputes the contention of the husband that loans were made to the second respondent, but accepts that at first instance the dispute rests properly between the husband and the second respondent.

3. In relation to T Pty Ltd, the husband filed a document setting out his Contentions of Fact and Law.  In that document the husband seeks a finding by the Court that the wife has a beneficial interest in the properties and that the value of the Suburb S and Suburb W properties should be included in the pool of assets available for division between the parties.

4. The basis for the husband’s claim is that the wife has the beneficial ownership of the properties by way of Constructive Trust.

5. T Pty Ltd is the trustee of the MK Trust No 13 (“the trust”).

6. Mr AA Benson and Ms CC Benson are the parents of the wife and Mr AA is the appointor and guardian of the trust.  Mr AA and Ms BB Benson and their children namely, Mr AA Benson, Mr Benson (the second respondent) and Ms Benson (the wife) are beneficiaries of the trust. On 11 February 2014 the directors of T Pty Ltd changed to Ms CC Benson.

7. It is as a result of the husband’s contention that the order was made on 27 April 2015 for T Pty Ltd to be joined as a party to the proceedings.

8. The current application does not concern any consideration of the husband’s contention that T Pty Ltd holds the Suburb S and Suburb W property on trust for the wife.

9. The relevance of T Pty Ltd is in respect of the husband’s assertion that the total sum of $400,000 was provided to the second respondent by the parties directly and via T Pty Ltd under the direction of the wife.

10. The following orders as set out in the Further Amended Initiating Application are relevant to the current interim application:-

    As against the second respondent

    39.Within seven days pursuant to section 90AE(2)(a) or in the alternative pursuant to section 106B the second respondent pay the sum of $400,000 into the trust account of Forte Family Lawyers.

    40.The second respondent pay the husband’s costs of and related to the husband’s application against the second respondent on such basis as the Court deems fit.

11. In the Case Outline document filed 26 April 2015, the husband sets out the claim against the second respondent.  He alleges that the second respondent held the position of accountant to the parties.  In December 2012, it is alleged that the second respondent requested urgent funds on a short term basis only and the parties via their corporate entity Company U Pty Ltd (“Company U”) agreed to lend the second respondent the sum of $220,000.

12. It is conceded by the husband that the agreement was party oral and partly in writing, with the latter constituted by text messages as between the husband and the second respondent.

13. The husband alleges that he understood the second respondent would provide the sum of $220,000 (“the first sum”) for the use either by him personally or in respect of a company namely, MTI Pty Ltd (“MTI”).

14. The parties separated on 28 January 2013.  On 21 February 2013 the husband alleges that by way of agreement between the wife and the second respondent, she caused T Pty Ltd to pay on her behalf to the second respondent the sum of $180,000 (“the second sum”).

15. The husband says that he had made demands on the second respondent for repayment but none has been forthcoming.  Accordingly, the husband holds the second respondent personally liable.

16. I have had regard to the documents filed by each of the parties in preparation for trial and in particular, an affidavit of the husband filed 10 April 2014 filed in support of the joinder of Mr Benson as second respondent to his Initiating Application.  I have also been assisted by the submissions on behalf of the husband, the wife and the second respondent together with the transcript of the proceedings on 27, 28 April 2015 and 1 May 2015.

CHRONOLOGY

1990              Husband and wife meet

1992              Husband and wife commence cohabitation

10.10.00Company U Pty Ltd is registered and incorporated. Company U is the trustee of the BI Trust.  The husband transferred ownership and control to the wife in 2004.  Company U owns various properties.

14.8.2001Company EE is registered and incorporated.  The husband is the sole director and shareholder. EE is the trustee of the EE Unit Trust.  This is the entity by which the husband and wife operated their childcare business.

2001Mr Benson establishes his accounting practice – Benson and Co.

April 2009The second respondent sets up MTI Pty Ltd (“MTI”).  MTI is the trustee for the MTI Unit Trust.

13.12.2010Husband and wife marry.

11.11.2011Parties separate.  The husband is the subject of criminal proceedings.

April 2012The husband and wife sell business and premises.

December 2012 The husband and wife meet with second respondent to discuss the provision of funds for investment in MTI.

29.12.2012Text messages exchanged between husband and second respondent.

31.12.2002Husband and wife cause Company U to deposit $220,000 into the account of MTI. Wife asserts that monies paid from Company U Westpace Loan Account to EE account and then to MTI.

Feb 2013Wife advises second respondent that she intends to invest further in MTI with a payment to be made by T Pty Ltd.

21.2.2013$180,000 deposited into the bank account of MTI by T Pty Ltd with funds raised from the proceeds of the sale of a property at DD Street, Suburb Q sold in January 2013.

7.3.2013Husband files Initiating Application.

22.5.2013Husband files Application seeking the joinder of T Pty Ltd.

19.7.2013Orders made by consent removing  T Pty Ltd from the proceedings following the payment of $470,000 to Company U.

30.6.2014MTI placed into liquidation.

16.7.2014Creditors of MTI meet and liquidator accepts a proxy signed by wife on behalf of Company U to vote for $400,000 as being a credit of MTI.

4.9.2014Second respondent files a Response seeking that the husband’s application for orders against him be dismissed.

3.10.2014Matter listed for final hearing on 16 March 2015.

10.2.2015Matter now listed for final hearing on 27 April 2015.

27.4.2015T Pty Ltd joined as a party to the proceedings.

1.5.2015Matter listed for final hearing before Macmillan J on 10 August 2015.

DETAIL OF HUSBAND’S ALLEGATIONS IN SUPPORT OF JOINDER

1. By his affidavit filed 10 April 2014, the husband alleges that:-

   5.The funds paid to [Mr Benson] from Wespac loan accounts of an entity controlled by [Ms Benson], [Company U Pty Ltd] (“[Company U]”).  [Ms Benson] and I have jointly and severally guaranteed the loans of [Company U] and they are secured on real estate owned by [Ms Benson], [Company U] and me.  The loans are in arrears and Westpac is threatening foreclosure as no regular repayments have been made since February 2013.

2. At paragraph 7 of the said affidavit the husband records that on 29 December 2012 he and the wife caused Company U to loan $220,000 to the second respondent to invest in the purchase of cheap metal by his company MTI.  The husband considers that it is important that at the time of the discussion between he and his wife, he was unaware that the parties were to separate and perhaps more relevantly, was unaware that MTI was not controlled by the second respondent but rather, his father.  He says that if he had known of these matters he would not have agreed to loan the funds.  The husband does agree with the wife’s position namely, that the funds were transferred from the Company U accounts with Westpac to the EE accounts before transfer to the second respondent.

3. It is the contention of the husband that the parties agreed to loan the monies to the second respondent over a short period of time with the expectation that it would be repaid within a few weeks.

4. In the wife’s affidavit of 22 April 2013 she considers that the investment had some better defined structure to it namely, that the expectation was of repayment over six to eight months with interest at the rate of 15 per cent.

5. Unbeknown to the husband, he alleges that a further $180,000 of Company U money was loaned to the second respondent by T Pty Ltd.  At paragraph 11 of his affidavit, the husband records:-

   [T Pty Ltd] had received $823,000 of [Company U] money at [Ms Benson’s] direction and [T Pty Ltd] paid $180,000 to [Mr Benson] ostensibly pursuant to a purported commitment by [Ms Benson] and I to lend the money.  I deny making this commitment.  For practical purposes, to the best of my knowledge, the control of [T Pty Ltd] has always been with [Ms Benson’s] father [Mr AA Benson] who is the patriarch of the family.

6. The wife asserts that the sum of $180,000 was paid by T Pty Ltd to MTI and contrary to the assertions of the wife, the husband alleges that the discovery process revealed that the money was paid into an account of the second respondent on 21 February 2014 and was not paid directly to MTI as alleged. The husband seeks to set aside the two separate transactions pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”) or s 90AE(2)(a).

SUBMISSIONS OF THE PARTIES

Second Respondent’s Submissions

1. The second respondent focusses upon the relief sought by the husband pursuant to s 106B of the Act. The contention of the second respondent is that the proper respondent is not Mr Benson but rather MTI and given that the company is in liquidation, the proper relief for the recovery of funds is by lodging a Proof of Debt with the liquidator of the company. It is also argued that the power conferred on the Court by s 106B is necessarily “narrow and specific”.  In particular, what is sought to be set aside is not an “instrument” but rather a “disposition”. There is a challenge as to whether the evidence would support a finding for the exercise of power in s 106B but importantly it is argued that conceptually it is a nonsense for a litigant who is a party to the proceedings seeking to invoke the Court’s jurisdiction to set aside in effect their own transaction.

2. Accordingly, as to the first disposition of property namely the sum of $220,000 transferred in December 2012 by the husband and the wife from Company U, it is argued that the “disponee” is MTI and not Mr Benson.

3. As to the second sum of $180,000, it is acknowledged that this was a transfer effected by the wife via T Pty Ltd again to MTI.

4. It is argued that s 106B only allows for a claim against the recipient of money not those that may have been a “temporary station or transfer point” along the way.

5. The issue is even more acute in respect of the second transfer of money by the wife to MTI. It is conceded that the husband did not have knowledge or give his consent to the transaction. It is argued that it is inconsistent with s 106B for the husband to argue that the transaction should be set aside in circumstances where he is not able to gainsay the evidence of the wife namely, that the monies were advanced to MTI. In support of her own position, the wife has lodged a Proof of Debt with the liquidator for MTI and there is nothing to suggest that there is any viable alternative position.

6. What is being argued is the purportedly straightforward proposition that “an application to set aside a relevant instrument (if there were one) could be brought against the second respondent, any action to recover property pursuant to s 106B can only succeed against the disponee MTI”.

7. Accordingly, it is argued that the claim against the second respondent cannot succeed in that even that if the disposition was set aside, s 106B does not extend to the recovery of funds if it is acknowledged that they are not held by the second respondent but rather have ended up where they were intended to be placed namely, with MTI. In short, MTI should be joined in the proceedings but this is problematic and likely to be a barren exercise in circumstances where MTI is in liquidation.

Husband’s Submissions

1. The husband argues that the matters raised by the second respondent in support of his application for disjoinder is in reality an application for summary dismissal.

2. By reference to the decisions of Bigg & Suzi (1998) FLC 92-799 and Pelerman & Pelerman (2000) FLC 93-037 and summarised at [47]:-

   (a)The power for summary dismissal is a discretionary one.

   (b)Relief “is rarely and sparingly provided”.

   (c)The parties seeking summary dismissal must show the application is “doomed to fail” or has been otherwise described “that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexations”.

   (d)A weak case or one that is unlikely to succeed is not “sufficient to warrant determination”.

   (e)“If there is a serious legal question to be determined, it should ordinarily be determined at trial”.

   (f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its proceedings”.

3. In summary, the husband argues that his application is not “doomed to fail”.  It may be argued that the chance of success is limited but that is a qualitatively different test than is required for summary dismissal.  See Bretton & Bondai [2013] FamCAFC 168 at [59].

4. Interestingly, the husband concedes that the orders that he seeks as presently drafted “may ultimately be deficient”. In particular, there is a concession at paragraph 27 of the written submissions that reliance upon s 90AE(2) of the Act for relief is misguided.

5. The focus of the order being sought as drafted centres upon s 106B exclusively.

6. The Court is urged however to read the orders sought in conjunction with the husband’s Case Outline document and various affidavits.

7. What is now sought by way of amendment is the following:-

   48AIn the alternative to paragraph 48, that within seven days the second respondent pay to [Company U Pty Ltd] or the husband and the wife the sum of $400,000 (or such sum as determined by the Court) by making such payment into the trust account of Forte Family Lawyers.

8. The proposed amendment is potentially significant when considered against the following submission of counsel for the second respondent at line 7 page 93 of the transcript of 28 April 2015:-

   In this case there is no dispute on the evidence that the property was transferred or alienated in favour of [MTI]. No dispute that it was paid physically and directly to [MTI]. There is a dispute about whether or not there was a separate agreement between my client personally and the parties, but that is completely irrelevant to section 106B issues. Section 106B is only designed to set aside in the hands of the recipient of the property the disposition. So, your Honour, the cause of action simply – under section 106B simply cannot be brought against my client. There are other valid and try able claims that could be brought against him personally, but it certainly is not a 106B application that can be brought against him. It must be brought against [MTI].

1. Further, at line 33 the following submission is made:-

   Yes.  They’ve got the wrong respondent.  And, your Honour, if they had wanted to bring a proper claim against my client personally they could and should have done so in the civil courts but, of course there’s a litigation – sorry a liquidation process in train and that legislation (sic) and that process, covers the field in relation to the claims arising out of investments in [MTI].

2. The husband argues that whilst the funds came from Company U they were effectively borrowed by the husband and the wife or either of them to provide monies to the second respondent for his purported use in MTI.

3. The husband relies on s 106B(5) of the Act where “interest” in s 106B(1) is defined as:-

   (a)in a company includes:

   (i)a share in or debenture of the company; and

   (ii)an option over a share in or debenture of the company (whether the share or debenture is issued or not); and

   (b)in a trust includes:

   (i)a beneficial interest in the trust; and

   (ii)the interest of a settlor in property subject to the trust; and

   (iii)a power of appointment under the trust; and

   (iv)a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and

   (v)an interest that is conditional, contingent or deferred.

4. Accordingly, it is argued that the husband has an interest in a trust namely the BI Trust with Company U as its trustee and the parties have the added connection of being guarantors in respect of the liabilities of that trust.

5. Additionally, the wife is the sole director and shareholder of Company U and it is argued that the Court can treat Company U as the alter ego of the wife.

6. It is an important contention of the husband that the subpoenaed records of MTI before it entered liquidation do not indicate the receipt of the purported funds but rather it is suggested that at all times the second respondent retained the funds.  It could not be said that there was any agency on his part exclusive to MTI given he was the accountant for both MTI, Company U and the parties.

7. It is a question of evidence as to whether the sums paid were a loan or an investment or had some other status.

8. In short, the husband argues that the evidence demonstrates that whilst he may not have found the needle, discovery has certainly uncovered the hay stack.  The consistent and central participant in the transactions is the second respondent.

9. To counter the argument of the second respondent that it would be an inconsistent and inappropriate basis to found a s 106B application on a party’s own transaction, the husband argues that the disposition was by the wife given she was the sole director of Company U and the only person with authority to utilise the companies funds.

10. The argument raised that the claim should be against MTI is rejected by the husband.  He argues that it is a matter of evidence that there was a loan or investment in MTI.  That should properly be a matter to be determined at trial.  That proposition is not conceded by the husband and whilst it is acknowledged that Company U is a listed creditor of MTI, that was a unilateral act of the wife undertaken significantly after the event.

11. The precarious financial position of MTI is also in issue.  The husband contends that if he had been told that the monies were to be used by the second respondent as an investment in MTI and that the company was in a risky, uncertain or poor financial position, then this would have been a relevant factor to consider.  The wife did not advise the husband of any knowledge that she had of MTI being an at risk company and it is reasonable to assume that the wife would not have been frivolous with the monies obtained from T Pty Ltd representing the second payment if she was aware of the risk of liquidation.

12. Interestingly, the second respondent contends that he told the husband and wife in December 2012 before the first payment that it represented a risky investment.  There are a number of issues that arise in that regard but it must be said that their determination , relevance and impact are matters for trial.

Wife’s Submissions

1. The wife generally supports the submissions of the second respondent.

2. The wife argues that the orders sought by the husband in paragraph 48 does not specify or identify the instrument to be set aside.  This is said because of the wife’s contention that “there is no assertion that the funds transferred were physically received by [Mr Benson]”.

3. As I understand the husband’s position, he does content that monies were received into an account of the second respondent and that attempts at discovery have not revealed monies being received into the accounts of MTI.

4. The wife further argues that paragraph 48 may well be “frivolous, vexatious or an abuse of process” pursuant to Rule 10.12(c) of the Family Law Rules 2004 (Cth) (“the Rules”). This is said because of the wife’s position that the Court cannot make an order in terms of paragraph 48 and that therefore the application should be considered as vexatious or an abuse of process.

5. To the proposed amendment in paragraph 9 of the husband’s submissions, it is argued that no attempt is made to explain the action or to identify the action to be agitated in the Family Court pursuant to its accrued jurisdiction.

6. The very fact that it is an alternative to paragraph 48 (seeking relief pursuant to s 106B) would obviously suggest that it is a different cause of action.

7. At paragraph 15 of the wife’s submissions, the following concession is made:-

   The sections of the Family Law Act now sought to be relied upon should be identified, or in the case of accrued claim, a proposed statement of claim should be required from the husband, before the court considers granting him leave to make an amendment to the orders he seeks at this advanced stage of the proceedings.

CONSIDERATION

1. The Rules of this Court provide for the naming of a person to be joined to the proceedings be deemed sufficient. The joinder of the second respondent arises from his inclusion in the Amended Application of the husband filed 10 April 2014.

2. In B Pty Ltd & Ors v K & Anor (2008) FLC 93-380; 219 FLR 107, the Full Court said at 116:-

   We do not accept that it is proper to allow a joinder of third parties merely upon the formulation of a paragraph in, or to be added to, an application, on the basis that at trial facts to support the application may be asserted and proved.  Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.

3. The second respondent by affidavit filed 8 August 2014 sets out the basis upon which he opposes a claim pursuant to s 106B of the Act seeking an order that he pay $400,000 to the husband’s solicitors.

4. The matters raised by the second respondent are well understood and contrary to the assertion of the husband that there is a lack of transparency as to the mechanics of money being transferred to either the second respondent or MTI, at paragraphs 14 to 17 the second respondent sets out the circumstances by which he alleges that monies advanced found their way into the bank account of MTI.

5. It is axiomatic that a party can only be joined to the proceedings if there are orders sought against them by way of final or substantive relief as opposed an interlocutory order.  The second respondent has a right to be heard.

6. The onus therefore falls to the second respondent to seek their removal from the proceedings.

7. I do not propose to repeat the submissions eloquently displayed in the submissions document filed on behalf of the second respondent, but essentially it is asserted that the husband cannot succeed by relying upon s 106B for relief where the recipient of the funds is MTI now in liquidation. Whatever the position might be in respect of the second respondent, it is argued that he does not have the funds.

8. It seems to me that the appropriate test must be that which applies to an application for summary dismissal.  The relevant consideration is that the proceedings or claim against the second respondent must be either “doomed to failure” or “obviously futile”.

9. It is acknowledged that whilst the husband now seeks to expand the range of relief sought against the second respondent by reliance upon a proposed amendment namely, paragraph 48A as set out in his submissions document, this new order or pleading is without sufficient detail or particularity to clearly identify the relevant or appropriate cause of action.

10. I am uncertain whether there is opposition to the proposed amendment to orders sought or if the argument is that notwithstanding the proposed order, there is no merit in the claim.

11. In Horton v Jones(No 2) (1939) 39 SR (NSW) 305 at p 309-310, Jordan CJ said:-

    It is now common place that if a party to a legal proceedings establishes to the satisfaction of the Court that he is genuinely desirous of amending his pleadings for the purpose of modifying or otherwise altering some existing claim or defence, or of introducing a new ground of claim or a new matter, he should be permitted to do so, subject to the imposition of such terms as may be proper, unless the proposed amendment is so obviously futile that it would be struck out if it appeared in an original pleading, or unless it is one that it would be impossible to allow upon any terms without causing substantial injustices to another party to the proceedings.

12. In Lindon v The Commonwealth(No2) (1996) 70 ALJR 541 at p 55, Dawson J said in effect the test was not whether a case was weak and unlikely to succeed but rather, whether it was doomed to failure.

13. As discussed, the proposition in Lindon (supra) was considered by the Full Court in Pelerman (supra).

14. In Trawl Industries of Australia Pty Ltd (recrs and mgrs apptd) (in liq) and Ors v Effem Foods Pty Ltd (1992) 108 ALR 335 Gummow J said at page 347:-

    However, as indicated above, for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form.  This reflects the constitutional basis of federal jurisdiction, to which I have referred earlier in these reasons.  Also, it allows for the very many controversies which now come before superior courts, federal and state, without pleadings.  And even where pleadings are necessary or are ordered, the effect of the judicature system of pleading, now in general operation in Australia, is as described by Barwick CJ:

    [T]here is no necessity to assert or identify a legal category of action…It is sufficient in matters in the Federal Court to assert the facts on which the plaintiff or applicant party relies and to nominate the remedies which he seeks as a consequence of the occurrence of those facts.”  Philip Morris Incorp v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473; 33 ALR 465.

    The above was quoted with approval by the Full Court in Pagliotti & Hartner (2009) 41 Fam LR 41.

15. This Court does not rely upon or require pleadings.  It is permissible to gain an understanding of the nature and the extent of the claim and the particulars of the claim from documents properly identified.  In this regard there is substantial affidavit material and written submissions documents that set out the parameters of the husband’s claim.  It is not for me to determine to finality the orders sought by the husband against the second respondent unless I am satisfied that they are so lacking in any merit that they are “doomed to fail”.

16. It is conceded by the second respondent that there may be alternative relief that could properly raise an arguable case that would need to be answered by the second respondent, but it is his position that more is required in the context of the current proceedings.

17. There is clearly a dispute between the parties that would require a finding of fact.

18. The husband may or may not accept the evidence of the second respondent that the money provided found its way to the account of MTI.  Furthermore, there remains a dispute as to whether the husband and/or the wife received advice from the second respondent that the investment was perilous and risky.

19. The proposition encompassed in the proposed paragraph 48A would seek to allege that there was a contractual relationship between the husband and/or the wife (via Company U and T Pty Ltd) directly with the second respondent as opposed to their recognition that he was merely acting as an agent for the intended recipient of the funds namely, MTI.

20. It may well ultimately be a contention that the husband cannot substantiate.

21. I am not in a position of the trial Judge who will be required to decide what orders should properly be made.  I am not concerned with the merits of the claim but rather to have proper regard to the principles enunciated by the Full Court in Pelerman (supra).

CONCLUSION

1. The litigation is clearly complex and there is strongly polarised positions adopted by each of the husband, the wife and the second respondent.  The very complexity may well be sufficient to demonstrate an arguable case.

2. Accordingly, I consider that the claim by the husband against the second respondent should remain and the application for summary dismissal and therefore disjoinder should be dismissed.

3. I make orders as appear at the commencement of these reasons.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 17 July 2015.

Associate:

Date:  17 July 2015