Messana & Messana

Case [2023] FedCFamC1F 365

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Messana & Messana [2023] FedCFamC1F 365

File number: PAC 6602 of 2020
Judgment of: CAMPTON J
Date of judgment: 15 May 2023
Catchwords: FAMILY LAW – PROPERTY – PRACTICE AND PROCEDURE – Application for joinder of 16 proposed respondents – Where the joinder is resisted by each of the proposed respondents – Proposed respondents to be joined are the husband’s brothers, and a number of corporate entities in which the husband and his brothers have either direct or indirect interests – Where the husband seeks final relief against some of the proposed respondents pursuant to s 90AE of the Family Law Act 1975 (Cth) or in the alternative, pursuant to s 257A of the Corporations Act 2001 (Cth) s 257A – Where those respondents against whom the husband seeks final relief are necessary parties for the purpose of r 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Where some of the entities against whom relief is sought have no realisable assets and will be excluded from joinder.
Legislation:

Corporations Act 2001 (Cth) s 257A

Family Law Act 1975 (Cth) ss 79, 90AE, 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 3.1, r 3.01, ch 6

Cases cited:

Wayne & Dillon & Anor [2008] FamCAFC 204

Weir & Weir (1993) FLC 92-338; [1992] FamCA 69

Division: Division 1 First Instance
Number of paragraphs: 59
Date of hearing: 21 April 2023
Place: Sydney
Counsel for the Applicant: Mr Dura
Solicitor for the Applicant: Paul & Paul Lawyers
Counsel for the First Respondent: Ms Tabbernor
Solicitor for the First Respondent: Karen L Haga & Associates
The Second Respondent: No appearance
Counsel for the Proposed Third Respondent: Mr Hyde
Solicitor for the Proposed Third Respondent: King & Wood Mallesons

ORDERS

PAC 6602 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR MESSANA

Applicant
AND:

MS MESSANA

First Respondent

B PTY LTD

Second Respondent

order made by:

CAMPTON J

DATE OF ORDER:

15 MAY 2023

THE COURT NOTES THAT:

A.The proposed additional respondents for the purpose of these orders means the persons and entities referred to in paragraph 1 of the orders sought by the husband in his Application in a Proceeding filed 8 February 2023.

THE COURT ORDERS THAT:

Joinder of additional respondents

1.Mr C Messana be joined as the third respondent to the proceedings;

2.Mr D Messana be joined as the fourth respondent to the proceedings;

3.E Pty Ltd (…) be joined as the fifth respondent to the proceedings.

4.F Pty Ltd (…) be joined as the sixth respondent to the proceedings.

5.G Pty Ltd (…) be joined as the seventh respondent to the proceedings.

6.H Pty Ltd (…) be joined as the eighth respondent to the proceedings.

7.Messana Pty Ltd (…) be joined as the ninth respondent to the proceedings.

8.J Pty Ltd (…) be joined as the tenth respondent to the proceedings.

Amended relief

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Details
AGLC
Messana & Messana [2023] FedCFamC1F 365
Case
[2023] FedCFamC1F 365
Decision Date

CaseChat Overview and Summary

The parties to the case, Messana & Messana, were a married couple who separated in early 2020. The wife filed an Initiating Application seeking an adjustment to the value of 60 per cent of the available property in her favour, while the husband filed a Response seeking an adjustment to the value of 60 per cent of the available property in his favour. The court was required to decide whether certain additional respondents should be joined to the proceedings and whether the husband's application for joinder should be allowed.

The court considered whether the proposed additional respondents should be joined to the proceedings. It found that the husband's application for joinder would be refused in relation to certain entities as there was no plausible reason to accept the husband's brothers' contentions that these entities had no realisable assets. However, the court found that the husband's application for joinder of certain other entities should be allowed as they were necessary for the court to completely and finally determine all matters in dispute.

The court found that the husband's application for joinder of the husband's brothers and certain corporate entities in which they held interests should be allowed as they were necessary for the court to completely and finally determine all matters in dispute. The court found that the husband's brothers had a cause of action recognisable at law against the third parties and that the joinder of these parties was necessary to avoid a multiplicity of proceedings. The court also found that the husband's application for joinder of certain other entities should be refused as there was no plausible reason to accept the husband's brothers' contentions that these entities had no realisable assets.

The court refused the husband's application for joinder of certain entities and allowed the husband's application for joinder of the husband's brothers and certain corporate entities in which they held interests. The husband's brothers and the proposed additional respondents in the second category were put on notice of their risk as to costs in the event that the assertions of the husband's brothers as to the underlying value of these entities proved inaccurate.

Orders

Orders of the court

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Background

Background to the litigation

In support of their Response to an Application in a Proceeding filed on 12 April 2023, the proposed additional respondents relied upon:(a)A Case Outline filed on 21 April 2023 (Exhibit 4);(b)An affidavit of Ms O, the solicitor on record for each of the proposed additional respondents, filed on 12 April 2023; and(c)An affidavit of Ms O filed on 19 April 2023.BACKGROUND The husband and wife married in 1986. They effected a separation in early 2020. They have five adult children. The wife commenced these proceedings by filing an Initiating Application on 8 December 2020, seeking orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). She broadly seeks an adjustment to the value of 60 per cent the available property in her favour. The husband filed a Response to the Initiating Application on 22 December 2020. He seeks an adjustment to the value of 60 per cent of the available property in his favour. As part of the litigation, the husband and wife filed have developed a joint balance sheet, a draft of which was filed on 13 February 2023 and marked Exhibit 5 in this application. It records the husband and wife’s assertions that the value of the property available for adjustment between them being in the range of $37 million. Of that total value, between $25 million and $27.5 million is held by way of corporate entities in which the husband has a direct or indirect minority interest, either personally or by way of B Pty Ltd, with entities owned and controlled (by not dissimilar mechanisms) by his brothers. In addition to the various interests in entities, the parties jointly own two parcels of real property, one being at Suburb P in New South Wales and the other being at Suburb Q in Queensland. It was uncontroversial that as part of the s 79 adjustment, the wife will receive the husband’s interests in those two real properties, which would result in an adjustment in her favour of about $3.53 million. The parties have nominal superannuation. The husband’s other non-corporate assets, or interests held by minority interests with his brothers or their corporations, have a value of less than $1 million. Accepting for the purpose of these reasons that the wife will receive an adjustment of the husband and wife’s property to the value of 40 per cent in her favour (being the husband’s best case), it will be necessary for the husband or B Pty Ltd to access by way of their minority interests the wealth held by corporations that are controlled by the husband’s brothers or their corporations. Putting it another way, the minimum value of the wife’s adjusted entitlement pursuant to s 79 of the Act, as conceded by the husband, cannot be satisfied from the other property of the husband and wife alone, without accessing the assets of the corporate entities held either directly or indirectly by the husband in minority with those of his brothers. The relationship between the husband and his brothers was constructive and cooperative for many years over the course of the marriage. The husband’s affidavit evidence suggests that the relationship between himself and his brother’s is “strained” (at paragraph 25). Prior to the separation the husband was removed as a director from the five companies in which he and his brothers have interests, being G Pty Ltd, H Pty Ltd, Messana Holdings and Messana Pty Ltd and J Pty Ltd. As will be recorded in these reasons, four of those five entities are the entities that hold significant wealth between the husband and his brothers.The interrelationship of legal interests as between the husband and his brothers

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute.” Consideration and Determination A critical consideration as to whether a proposed additional party should be joined to proceedings, as mandated by r 3.01, is whether an order is sought against them. The first category of proposed respondents sought to be joined The amended relief to be sought by the husband or B Pty Ltd as identified in the proposed Amended Response to an Initiating Application seeks orders pursuant to s 90AE of the Act (as identified in the example in r 3.01 recorded at [32] above) or in the alternative, pursuant to s 257A of the Corporations Act 2001 (Cth) (“the Corporations Act”), against each of the following proposed additional respondents:(a)Mr C Messana (personally);(b)Mr D Messana (personally); and(c)Each of the corporate entities identified at [23] and [24] above. At this stage of the proceedings, the husband’s identification of the Court’s jurisdiction relied upon to ground joinder of these entities was not put into issue. That may not remain the case as the proceedings progress and when the strength of the arguable case for relief sought by the husband against these entities is considered. This may be exposed upon the husband filing a Points of Claim document setting out a statement of contentions of fact and/or law that would give rise to the relief that he or B Pty Ltd seek. Hence on first glance, an application of r 3.01 would mandate the joinder of each of the above identified parties in that should the husband’s final relief be achieved, they will be bound by the final orders made. That however is not the end of the matter. The husband’s brothers unequivocally contend that each of the following proposed additional respondents no longer trade or have never traded and have no realisable assets:(a)Messana Holdings;(b)Messana (NSW);(c)Messana Consulting;(d)L Pty Ltd;(e)M Pty Ltd; and(f)K Pty Ltd. The husband’s brothers assert their contentions in relation to these proposed respondents are verified in documents disclosed by them to the husband and wife in the shadow of the hearing. The husband and wife, having regard to the volume of documents recently disclosed, are unable to verify these contentions. However, there is no plausible reason why these contentions should not be accepted having regard to the calibre of the current legal representation of the husband’s brothers. It would be a nonsense to allow the joinder of the entities in this second category if there was no utility to doing so. The husband’s application for joinder of these proposed respondents will be refused. In the event the assertions of the husband’s brothers as to the underlying value of these entities prove inaccurate, the husband is at liberty to bring such further application for joinder, with the husband’s brothers and the proposed additional respondents in this category being on notice of their risk as to costs.