MANDERVILLE & BORAH
[2019] FCCA 2752
•26 September 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANDERVILLE & BORAH | [2019] FCCA 2752 |
| Catchwords: FAMILY LAW – Joinder – whether the father of the respondent should be joined to the proceedings. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), rr.11.01, 13.07 |
| Cases cited: B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 Dickey, A, ‘Orders in respect of foreign property under section 79’ (1993) 67 Australian Law Journal 538 Nygh, P, Conflict of Laws in Australia (2014, 10th ed, Lexis Nexis Butterworths) |
| Applicant: | MS MANDERVILLE |
| Respondent: | MR BORAH |
| File Number: | BRC 1678 of 2015 |
| Judgment of: | Judge Spelleken |
| Hearing date: | 11 July 2019 |
| Date of Last Submission: | 11 July 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 26 September 2019 |
REPRESENTATION
| Solicitors for the Applicant: | HopgoodGanim Lawyers |
| Counsel for the Respondent: | Ms Carr (direct brief) |
| Counsel for the proposed Second Respondent: | Mr Dodd |
| Solicitors for the proposed Second Respondent: | Parry Coates Family Law |
ORDERS
That the Application in a Case filed on 25 February 2019 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Manderville & Borah is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 1678 of 2015
| MS MANDERVILLE |
Applicant
And
| MR BORAH |
Respondent
REASONS FOR JUDGMENT
Introduction
In this matter between the applicant, Ms Manderville (‘the applicant’) and the respondent Mr Borah (‘the respondent’), the Court is asked to decide whether the respondent’s father, Mr H, (‘Mr H’) should be joined as the second respondent to the proceedings.
The applicable rule with respect to a joinder application can be found in Rule 11.01 of the Federal Circuit Court Rules 2001 (Cth) which is set out as follows:
11.01 Necessary parties
(1) Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
(2) The Court may require a person to be included as a party.
(3) A person required to be included as an applicant who does not consent to be included may be included as a respondent.
(4) The Court may decide a proceeding even if a person is incorrectly included or not included as a party.
Evidence
The applicant relied on the Application in a Case, a further Amended Response and supporting affidavit filed on 12 February 2019.
The respondent relied on the response to the Application in a Case filed on 22 February 2019, his affidavit filed on 21 February 2019 and 22 February 2019 and the amended reply filed on 15 February 2018.
Relevant History
In 1988, the respondent and Mr H purchased a property in the UK at M Street, City N, UK (‘the UK property’). At paragraph 132 of his affidavit filed on 21 February 2019, the respondent deposes that the property was registered in the joint names of his father, mother and him. However, Annexure A of the applicant’s affidavit filed on 12 February 2019 contains a Historical Copy of Register of Title which records the respondent and Mr H as absolute owners of the property.[1] At paragraph 133, the respondent asserts:
133. By agreement between my father and me, I held my interest in the property on bare trust for him and my mother. When my mother died, the property passed to the names of my father and me.
[1] Annexure A of the applicant’s affidavit filed on 12 February 2019.
In 2007, the parties commenced cohabitation and lived rent free in the UK property until 2008.
In 2008, the respondent executed a declaration of trust which confirmed that he held a share of the UK property on trust for his father. Although the respondent did not adduce evidence of this declaration, Ms Carr handed up an extract of the declaration during the hearing. In this declaration, the respondent and Mr H are appointed as trustees. Under the heading “BENEFICIAL ENTITLEMENT” it states:
1. The Trustees declare that they now hold the Property and have done since 1988 upon trust for Mr H absolutely.
2. The Trustees declare that they remain personally liable and responsible in respect of all or any indebtedness secured on the Property.
In 2009, the respondent transferred his interest in the UK property to Mr H for no consideration. Annexure B of the applicant’s affidavit filed on 12 February 2019 confirms that Mr H is the sole owner of the UK Property as at this date.[2]
[2] Ibid, Annexure B.
The parties separated in April 2014.
Proceedings in the Federal Circuit Court with respect to parenting and property issues commenced on 3 July 2015. The matter was initially set down for trial on 16 March 2018, was adjourned due to the applicant’s failure to file material.
The matter was then placed in the trial callover on 25 February 2019.
On 10 February 2019, the applicant filed an Application in a Case seeking to join Mr H to the proceedings and to adjourn the trial commencing 25 February 2019. The applicant also filed a further Amended Response seeking the following orders on a final basis:
1. A declaration that Mr H holds a one-half share of the property known as M Street, City N, UK on trust for his son, Mr Borah.
2. That Mr H, is to pay to the Applicant de-facto Husband [‘the Applicant’] an amount equal to the value of one-half share within 30 days of that value being determined.
3. That within 7 days of his receipt of the funds referred to in paragraph 1 above, the Applicant is to pay to the Respondent de-facto Wife [‘the Respondent] the sum of $500,000 by way of property settlement.
4. That each party be declared to be the owner of and entitled to all real property, personal property and superannuation interests in that party’s respective name and possession and each party indemnifies the other with respect to any liabilities which may attach to such property.
5. That all applications before this honourable court be otherwise withdrawn and dismissed.
6. That each party pay their own legal costs.
On 12 February 2019, the applicant filed a further, further Amended Response seeking in addition to the final orders set out above the sale of the UK property, and in the alternative, orders under section 106B of the Family Law Act 1975 (Cth) (‘the Act’) with respect to the transfer of the UK property and the declaration of trust.
On 19 February 2019, the applicant filed a case outline seeking, in addition to the orders above, and amongst other orders:
a)A declaration that the declaration of trust with respect to the UK property is a sham;
b)A $500,000 cash payment from the respondent by way of property settlement.
On 24 February 2019, the applicant filed an amended case outline. There were no orders seeking for the joinder of Mr H.
On 25 February 2019, Judge Purdon-Sully adjourned the present application to 11 July 2019 before me, and the balance of the application was to be set down for a final hearing of two days.
On 5 July 2019, an order was made in chambers releasing a Family Report prepared by Ms S dated 1 July 2019.
Ms Carr’s submissions
Ms Carr of Counsel appeared on behalf of the applicant in the property aspect of these proceedings. I was told that Ms Franklin of Franklin Lawyers would be representing the applicant in the parenting matter.
The essence of Ms Carr’s submission relied on references to the difficulties the parties were experiencing in their relationship in the respondent’s affidavit filed on 14 March 2018. The applicant agrees with this at paragraph 7(v) of her affidavit filed on 12 February 2019 and deposes that she was unaware the respondent had transferred his interest in the UK property to Mr H at the time.
At the final hearing, the applicant anticipates that there will be a question of whether the respondent owns, by way of trust, a half interest in the UK property, which is submitted is worth 600,000 pounds in total, and therefore 300,000 pounds for the respondent. The next question the applicant anticipates is whether the 300,000 pounds should be added back into the property pool.
In addition, Ms Carr referred the Court to the Borah Children’s Trust (‘the Trust’), and the decision handed down by the Social Services and Child Support Division of the Administrative Appeals Tribunal which in effect found that the Trust had been established by the respondent’s parents for the benefit of the respondent and his sister. It also found that the respondent received regular and significant payments from the Trust, contrary to the complaints the respondent allegedly made about the amount of child support he was required to pay.
On that basis, Ms Carr contended that the source of the respondent’s distributions, being the Trust, could be used to add back the 300,000 pounds into the property pool.
Therefore, Ms Carr submitted that it is necessary for Mr H to be joined as a party to the proceedings to ensure he is afforded procedural fairness before the Court is asked to make order which alters the rights and liabilities of the respondent’s property.
Mr Dodd’s submissions
Mr Dodd of Counsel appeared on behalf of Mr H, who was not yet a party to the proceedings but nevertheless opposed the application for the joinder. In accordance with his oral and written submissions, he advanced the following grounds:
a)The applicant failed to satisfy the onus with respect to the Court’s jurisdiction over the UK property pursuant to the rule in British South Africa Co v Companhia de Mocambique [1893] AC 602 (‘the Mozambique rule’);
b)The applicant failed to satisfy the test for necessity pursuant to rule 11.01 of the FCC Rules;
c)In any event, the applicant’s case has ‘no reasonable prospect of success’ pursuant to Rule 13.07 of the FCC Rules.
With respect to the first limb, Mr Dodd submitted that the UK property was at the heart of the joinder application. Applying the Mozambique rule, an Australian court was barred from exercising jurisdiction to determine the ownership of or otherwise making orders affecting foreign property.
Mr Dodd further contended that the applicant had not sufficiently particularised her claim to establish that it was necessary for Mr H to be joined in these proceedings. That is, it was not enough for the applicant to present her case by relying on certain parts of various affidavits she had filed previously rather than providing a statement of claim which set out the basis upon which the trust existed.
As for the third limb, Mr Dodd argued that the applicant’s case had no substance, primarily due to the length of time between certain periods. In particular, the UK property was purchased 18 years prior to the parties’ cohabitation, and Mr H became the registered proprietor of the UK property 5 years prior to the parties’ separation.
Moreover, Mr Dodd brought to the Court’s attention the applicant’s concession at the eve of the first trial on 24 February 2019 where she chose not to agitate the joinder application. On this basis, the applicant would have known that she had no reasonable prospects for success in seeking the joinder.
Finally, Mr Dodd contended that the Borah Children’s Trust did not bear any relevance to this application because there were no orders sought with respect to the Trust.
Ms Ross’s submissions
Ms Ross appeared on behalf of the respondent. Her oral submissions centred on the relevant test for necessity, and echoed most of Mr Dodd’s submissions. That is, even if a transfer of the respondent’s half-interest in the UK property had occurred in the past, it did not necessarily follow that Mr H had to be joined.
It was pressed by Ms Ross that the respondent had always understood that he had a beneficial interest in the UK property by holding it on trust for his parents. When his mother passed away, he then held the interest on trust for Mr H. At no point did the respondent own the property.
It followed that when the respondent executed the declaration of trust, he did so in circumstances where Mr H was due to relocate from the United Kingdom to Australia, and had asked the respondent to enter into a declaration of trust that merely confirmed an arrangement that was put in place 20 years ago.
Further to the prospects of the applicant’s case, in Ms Ross’s submission, at its highest, the applicant appeared to be seeking a basis to set aside the declaration of a bare trust in respect of the respondent’s half-interest in the UK property. Of course, without any particulars provided by the applicant, this is difficult to anticipate.
However, it was contended that there was no arguable case for relief sought against Mr H which would warrant him to be joined in circumstances where the respondent had made no contribution to the purchase price of the UK property, where the respondent had a mere beneficial interest in the property in 2008 when the declaration of trust was entered into, and where the transfer of the respondent’s half-interest aligned with the nature of the his beneficial interest.
The submissions also echo the fact that the applicant had previously filed an application for joinder only after the first trial date had been vacated, and two weeks before the second trial date in February 2019. She then sought to vary the orders on several occasions and discontinue the joinder application on 24 February 2019, only to re-enliven it a day later.
Finally, as for the Trust, Ms Ross also noted that no orders had been sought by the applicant with respect to the Trust.
Discussion
Mozambique Rule
I shall deal firstly with the issues concerning the application of the Mozambique rule. If I take Mr Dodd’s submissions at its highest, the conclusion that the respondent seeks the Court to draw is that an Australian court is not a clearly inappropriate forum to make a determination on a UK property.
The Mozambique rule was summarised in Conflict of Laws in Australia in the following two propositions:
(a) a local court will not exercise jurisdiction in respect of the title to, or possession of, land situated beyond the court’s territorial jurisdiction on the basis that only the court of the place where the land is situated can effectively enforce an order for possession of, or title to, the land; and
(b) no action can lie in respect of trespass or other actions based on the plaintiff’s title to land situated beyond the court’s territorial jurisdiction.[3]
[3] Nygh, P, Nygh’s Conflict of Laws in Australia (2014, 9th ed, Lexis Nexis Butterworths) 79.
However, a series of authorities have discussed the effect of the Mozambique rule, particularly in the context of adjustments of property rights under section 79 of the Family Law Act 1975 (Cth) (‘the Act’).
In Chen & Tan [2012] FamCA 225, Kent J elaborates upon these following principles with respect to the Mozambique rule at [17] to [18]:
[17] However, a court exercising jurisdiction under the Act in family law exercises jurisdiction in personam and not in rem. There is therefore no offence to the Mozambique Rule for the exercise of jurisdiction with respect to foreign land. Thus, because proceedings for the adjustment of property rights pursuant to s 79 of the Act are in personam, an Order for one party to transfer title to real property situated overseas is not an exercise of jurisdiction in respect of title to, or possession of, foreign land, but an Order in personam against that party. Likewise, Orders for enforcement, including in relation to property located overseas, are made in personam.
[18] This may be qualified to the extent that, having regard to the principle that a party ought not be ordered to do something illegal in the place it is to be done, when exercising jurisdiction in personam, Courts ought be alive to avoiding the making of an Order in relation to any assets located in a foreign country that might operate in direct conflict with the laws of that country (emphasis added).
Finally, the Full Court in Teo & Guan [2015] FamCAFC 94 referred to a passage Dr Anthony Dickey QC, ‘Orders in respect of foreign property under section 79’ (1993) 67 Australian Law Journal 538:
It may be objected that an order under s 79 cannot be made in respect of foreign property as this offends the common law jurisdictional bar on domestic courts adjudicating upon rights to foreign land as laid down in British South Africa Co v Companhia de Mocambique ([1893] AC 602). It now seems clear, however, that this jurisdictional limitation does not apply to proceedings under s 79, as the rule in the Mocambique case concerns proceedings only to determine existing title to, or existing right to possession of, foreign land. Proceedings under s 79 are of a different character. They concern rights arising from a matrimonial relationship, even though these rights may ultimately involve the disposition of foreign land. This point was made in respect of equivalent English proceedings by the Court of Appeal in Hamlin v Hamlin ([1986] Fam 11 at 21). The Family Court may nonetheless always decline in the exercise of its discretion to make an order under s 79 in respect of foreign land. It may do so, for example, if the order cannot be enforced in the foreign jurisdiction… (emphasis added).
In light of these authorities, I do not accept the first limb relied upon by Mr Dodd, given that property adjustments under section 79, and by extension section 90SM in this matter, are immune from the application of the Mozambique rule.
Necessity
The issue before the Court under Rule 11.01 of the FCC Rules is whether the participation of Mr H is necessary in order for the Court to finally determine the matters in dispute in the property proceedings between the parties. Indeed, there is no restriction on when an application for joinder can be made: Bishop & Bishop [2003] FamCA 240.
Mr Dodd in his written submissions referred to the decision of Warnick J in Wayne & Dillon & Anor [2008] FamCAFC 204 (‘Wayne & Dillon’) where His Honour held at [18] to [19]:
[18] “necessary” in rule 11.01 must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to established an identified “case”, joinder is unlikely to be “necessary”.
[19]: a “third person” is particularised, then it is that least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute”.
His primary submission was that the applicant had not sufficiently particularised her claim to establish to the Court that it would be necessary for Mr H to be joined as the second respondent in the proceedings.
A similar ground was relied on by the Warnick J in Wayne & Dillon and Harland J in Kraus & Katuras [2019] FCCA 1133 (‘Kraus’). In the latter case, Her Honour similarly dismissed an application to join the wife’s mother as the second respondent in the proceedings and held at [37]:
37. 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.
It is also apt to refer to what the Full Court held in B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 at [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).
I am inclined to accept Mr Dodd’s submission. Save for the Historical Copy of Register of Titles on the UK property, and an extract of the declaration of trust, the applicant has failed to formulate a statement of claim, and specify the basis and nature of such a claim.
Instead, as was the case in the other authorities I referred to earlier in these reasons, what is before the Court is an Application in a Case, and affidavit material upon which the applicant relies.
At most, having regard to the affidavit material before the Court, that the applicant’s case can be summarised at paragraph 7(viii) of her affidavit filed on 12 February 2019:
I say that while we were in UK Mr Borah and his father conspired to take steps to prevent any claim which I may have had to Mr Borah’s interest in the UK house. I say that the transfer was made in August 2009 because, given the difficulties Mr Borah and I were having in our relationship, Mr Borah and his father anticipated the possibility of legal proceedings.
Nonetheless, it is neither the task of the Court, nor as submitted by Mr Dodd, a task for Mr H “to endeavour to craft from evidentiary material what the cause of action against [him] might be”.[4]
[4] Wayne & Dillon & Anor [2008] FamCAFC 204 [28].
In line with Harland J’s reasoning in Kraus, the Court must also weigh the potential prejudice to the applicant, respondent, and Mr H when determining whether the joinder application should be granted.
As was emphasised by Ms Ross, the prejudice that may be occasioned on Mr H would be significant for three reasons. First, he resides in UK, and in those circumstances, would have to incur a significant expense to engage legal representation and participate in proceedings in another jurisdiction. Second, he is of advanced age. Third, in circumstances where the proceedings on foot involve both property and parenting issues, he would only be required to be joined as a party to one aspect of the proceedings.
If the applicant’s application is dismissed, the prejudice to her would be an inability to pursue a claim against Mr H. However, having regard to her failure in taking the opportunity to adequately particularise her claim, in circumstances where this is the third time she has brought a joinder application, I find that the prejudice to Mr H outweighs the prejudice to the applicant.
Reasonable Prospect of Success
The last limb that Mr Dodd relied on was the lack of a reasonable prospect of success on the applicant’s case in reference to Rule 13.07 of the FCC Rules concerning the disposal of a matter by summary judgment.
While it is not necessary for the Court to consider this provision to determine whether a joinder application is granted, I take both Mr Dodd’s and Ms Ross’s submission on this matter.
The fact that the parties may have been experiencing difficulties in their relationship in early 2008 does not necessarily establish a link, or indeed anything untoward, about the respondent’s transfer of his half-interest in the UK property, which occurred five years prior to separation.
I have considered this in the context where, as Ms Ross submitted, the declaration of the trust was made to confirm the nature of the respondent’s beneficial interest in the property, and the transfer of the respondent’s interest only served to confirm the arrangement under the trust.
Conclusion
For the reasons set out above, I shall dismiss the applicant’s application to join Mr H as the second respondent in these proceedings.
Moving forward, as I raised with the parties when the matter was before me, the balance of the outstanding parenting and property matters shall proceed to a final hearing of no more than two days.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Spelleken
Date: 26 September 2019
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