MJM v DT - [2020] NSWSC 1881

Supreme Court

New South Wales

Medium Neutral Citation: MJM v DT [2020] NSWSC 1881
Hearing dates: 9 and 14 December 2020
Date of orders: 18 December 2020
Decision date: 18 December 2020
Jurisdiction: Equity - Duty List
Before: Robb J
Decision:
Order that the applicant’s notice of motion be dismissed. See also [93] and [94] below.

Catchwords:
CORPORATIONS — Directors and officers — Authority and powers — whether assets may be accessed — where the allocation of shares is such that there is not enough voting power to do so.
CIVIL PROCEDURE — Cross-vesting — Transfer to Family Court of Australia — Relevant factors — where interim relief has already been sought in the Family Court of Australia that would achieve the interlocutory outcome sought in this Court — transfer order refused.

Legislation Cited:
Family Law Act 1975 (Cth)
Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW)
NSW Trustee and Guardian Act 2009 (NSW)

Cases Cited:
Norton & Locke (2013) FLC 93-567; [2013] FamCAFC 202

Category: Procedural and other rulings
Parties: MJM (plaintiff)
DT (defendant)
Representation:
Counsel: J Ireland (sol) (plaintiff / respondent)
E Cohen (defendant / applicant)
Solicitors: McGirr Lawyers (plaintiff / respondent)
Livingston & Company Lawyers (defendant / applicant)

File Number(s): 2020 / 344898

Judgment

On 21 February 2020, in proceedings No 37603 of 2020, Lindsay J made a declaration pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009 (NSW) (the Act) that the present plaintiff, MJM, is incapable of managing his affairs, and an order under the same provision that MJM’s estate be subject to management under the Act.
By further order made under s 41(1)(b) of the Act, Sarah-Jane Huntington was appointed as manager of Mr MJM’s estate, subject to the orders and directions of the NSW Trustee and Guardian (TAG).
Lindsay J also made an order that the daughter and a son of MJM, as well as his present solicitor, be appointed as a committee of the person of MJM (called “the Guardians” in the orders) with various powers stated in the orders to make decisions about various aspects of MJM’s care.
I will follow the usual practice in the Protective List of this Court by anonymising the parties.

These proceedings

On 3 December 2020, Parker J, sitting as duty judge, gave MJM leave to file the summons in the present proceedings, which have been brought by Ms Huntington as financial manager of the protected estate of MJM.
The defendant to these proceedings is DT.
By his summons, MJM sought orders in the following terms against DT:

1.   An order that the Plaintiff MJM have possession of the premises known as [an apartment in] Potts Point in the State of New South Wales (Premises).
2.   Judgment accordingly.
3.   An order granting leave to issue a writ for possession of the Premises.
4.   An order providing for the costs of these proceedings.

The matter that is the subject of these reasons for judgment is an application brought by DT in the duty list by notice of motion filed on 7 December 2020, which seeks the following procedural relief:

1. That pursuant to s 5 Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), the Summons filed on 3 December 2020 (by the Plaintiff/Respondent) be transferred to the Family Court of Australia to be heard at the same time as proceedings no SYC 8560/2020.
2. In the alternative to Order 1 above, that these proceedings be stayed pending the outcome of the proceedings no SYC 8560/2020 in the Family Court of Australia.

Family Court proceedings

It will be convenient to refer to the proceedings referred to in the notice of motion as the “Family Court proceedings”. The Family Court proceedings were commenced by Initiating Application filed in the Family Court of Australia (Family Court) on 27 November 2020. DT has sought an order that Ms Huntington be appointed as Case Guardian for MJM, who is the respondent to the proceedings.
The primary order sought by DT against MJM in the Family Court is an order that, within 28 days of the making of the order, MJM pay to DT the sum of $4,230,000.
DT also seeks an interim order in the nature of a declaration that DT and MJM lived in a de facto relationship from about August 2010 until 6 August 2020. He seeks an interim order that MJM be restrained from doing anything to remove DT from the apartment in Potts Point that is the subject of MJM’s summons (the Apartment) until further order of the Family Court, or mutual agreement between the parties in writing. Among other orders, DT seeks an interim order that MJM pay him $100,000 within 14 days on account of the claim for final relief.
The Initiating Application is expressed to be returnable for a financial case assessment conference at 11:30 AM on Wednesday 3 February 2021.
DT has not yet moved on his application in the Initiating Process for an interim order restraining MJM from doing anything to remove DT from the Apartment until further order of the Family Court. It is not clear why DT has not done so, and in particular it is not known whether DT has not sought that interim relief because of a perception that the application would not be dealt with quickly enough by the Family Court.
Instead, DT has sought an order that MJM’s application by proceedings in this Court for an order that DT give him vacant possession of the Apartment be transferred to the Family Court, or alternatively that these proceedings be stayed pending the outcome of the Family Court proceedings. DT could achieve the same practical outcome by the interim relief he has sought in the Family Court.
The Court will be empowered by s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (Cross-vesting Act), if it is satisfied that this proceeding is related to the proceeding pending in the Family Court and it is more appropriate that this proceeding be determined by the Family Court, having regard to the interests of justice, to transfer this proceeding to that Court.
DT’s application in the Family Court will require that he demonstrate to that Court that he was in a de facto relationship with MJM within the meaning of s 4AA of the Family Law Act 1975 (Cth) (Family Law Act).
If DT is able to demonstrate this requirement, then the Family Court will have jurisdiction under s 90SM of the Family Law Act to make such order as it considers appropriate altering the interests of the parties to the relationship in the property of the parties. I take it that the Family Court would have jurisdiction to make the orders sought by DT.
The hearing was conducted on the basis that the existence of a de facto relationship between MJM and DT is a jurisdictional fact. That has the result that the Family Court will be required at a separate, preliminary hearing to decide that a de facto relationship existed, before it determines at a later hearing whether to make an order altering the property interests of the parties to the relationship.
MJM relied upon the judgment of the Full Court of the Family Court in Norton & Locke (2013) FLC 93-567; [2013] FamCAFC 202. That decision supports the following conclusion. Even though the jurisdiction of the Family Court to make an order altering property interests of the parties depends upon the finding of a jurisdictional fact that they were in a de facto relationship, the Family Court may, in an appropriate case, make an interim order preserving the status quo pending a final hearing, if it is able to satisfy itself on the interlocutory hearing that, on the evidence then before it, there is a sufficient likelihood that the jurisdictional fact will be established.
MJM accepts that he and DT cohabited for many years, but he denies that the circumstances of that cohabitation constituted a de facto relationship within the meaning of s 4AA of the Family Law Act.
MJM tendered in these proceedings his affidavit in support of the Family Court proceedings. The affidavit contains evidence of a close domestic relationship between DT and MJM over a period of about 10 years. I am not able to forecast whether or not the Family Court will regard the evidence as sufficient to prove that a de facto relationship existed. At this interlocutory stage, I am satisfied that MJM has established what would in the context of a different type of application be described as a serious question to be tried. I will proceed upon the basis that there is a real possibility that the Family Court will find that a de facto relationship existed between DT and MJM. Of course, the outcome will be influenced by additional evidence that the parties may tender, as well as the course of the hearing.
MJM’s solicitor, Mr McGirr, has given evidence that he has practised in the Family Court for many years. Mr McGirr said that the hearing of the jurisdictional question could take two to three days and is unlikely to be set down within the next 12 months. He stated the opinion that, if DT were successful on the question of jurisdiction, then a final hearing of the substantive issue could take place within a further 12 to 18 months.
There was no evidence as to how quickly an application for interim orders could be determined by the Family Court. However, counsel for Mr Trenouth made a point of submitting that the Family Court, notwithstanding its notoriously burdensome workload, has comparable facilities for the determination of urgent interlocutory applications as does this Court. This Court is not realistically able to forecast how quickly the Family Court could act on an application by DT for interim relief, or whether the jurisdictional limitations on that Court will reduce the utility of the interim relief that may be granted.
This Court does know that it is probable that the Family Court will not complete the hearing of DT’s application for a period measured in a number of years. Consequently, if the Court makes either of the orders sought by DT in his notice of motion, Ms Huntington will not be able to realise the value of the Apartment for the purpose of meeting the costs of caring for MJM for a number of years.
It is material that the primary relief sought by DT in the Family Court is an order that MJM pay him the sum of $4,230,000. That amount approximates the estimated value of the Apartment. It will therefore be necessary for the Apartment to be sold at some stage, whether or not DT succeeds in the Family Court in respect of the amount claimed, or some other amount.
If the Apartment were to be sold in the timeframe contemplated by Ms Huntington, then the proceeds of sale would be available to apply to the care needs of MJM. The proceeds of sale would also be available to be the subject of any interim order that DT may persuade the Family Court to make.
As MJM has submitted, if the Apartment is sold, the effect of the orders made by Lindsay J on 21 February 2020 will be that the proceeds of sale cannot be spent without the consent of TAG. TAG might authorise a portion of the proceeds of sale to be applied towards MJM’s needs, but DT could also make representations to TAG for the purpose of persuading it to require that an appropriate fund be maintained to provide protection for DT’s Family Court application.
Even if DT’s Family Court application succeeds, MJM has other assets (to which reference will be made below) available to meet any order of the Family Court. It follows that any partial dissipation of the proceeds of sale of the Apartment to provide for MJM’s care is not cause for concern.

DT’s circumstances

The practical position of DT is that his only income is a pension, he does not have any realistic chance of earning any other income, and he is presently living in the Apartment, where he lived with MJM for some years prior to MJM being placed in a nursing home at Rose Bay by the Guardians because of his deteriorating health. If the Apartment is sold, then DT will lose his home without, apparently, any realistic chance of obtaining suitable alternative accommodation.
As I understand it, DT accepts that he has no proprietary right to continue his occupancy of the Apartment, and he has no defence to DT’s application for an order for possession of the Apartment.

MJM’s circumstances

Ms Huntington gave evidence that MJM is now located at a nursing home at Rose Bay in Sydney where she visits him from time to time. MJM is bedridden and requires constant care and supervision and he is attended by nursing staff. He is not ambulant and has to be assisted with his personal care, such as showering, toileting and taking meals. His ability to comprehend and participate in conversations is significantly worse than it was earlier this year at the time of Ms Huntington’s appointment as MJM’s financial manager.
Ms Huntington also gave evidence that, as of late November 2020, MJM had total assets of $6,150,636 and total liabilities of $553,547.
The assets include the Apartment valued at $4,200,000 and one ordinary share in Lexamarque Pty Ltd (Lexamarque), which has an estimated value of $1,360,000. That company owns a building at Croydon (the Croydon boarding house) that is licensed to a third party for the purpose of operating an assisted boarding house, mostly for adults suffering from forms of mental illness who require moderate levels of support. There is one other share issued in Lexamarque that I will mention further below.
MJM’s liabilities include a debt of $518,481 to the Australian Taxation Office. Ms Huntington said in her evidence that this debt must be paid promptly.
Ms Huntington gave evidence that MJM presently has no source of income. His living expenses to date have been paid from monies held in personal bank accounts which existed at the time of Ms Huntington’s appointment. These monies have now been expended and Ms Huntington is relying upon funds derived from the sale of a motor vehicle.
MJM’s annual expenses total $457,867.23. The biggest components of those expenses are the $124,166.36 cost of the nursing home and a further $192,358.40 for a personal carer. DT criticised these expenses as being lavish. There was no evidence on this subject, save that it seems to be clear that MJM needs a high level of continuing care. It is a matter for the Guardians, in association with Ms Huntington, to decide the appropriate nature of the care that should be provided to MJM. Given the value of his assets, it is not within the province of this Court to make any judgment about the appropriateness of the level of care that is being provided to MJM.
MJM’s expenses include a total of $24,742.75 per annum as the costs of holding the Apartment. Those costs are not being recovered, as DT is occupying the Apartment without paying any rent or occupation fee.
In her affidavit sworn on 1 December 2020, Ms Huntington explained that a term deposit in the name of MJM of $197,435 that matured on 4 March 2020, had been expended for MJM’s purposes, including his legal fees in accordance with orders made by the Court. I note that DT had suggested that the term deposit should be available for the purpose of MJM’s care.
Ms Huntington has explained that the Apartment is the only readily realisable asset in MJM’s estate. Furthermore, its sale will not generate a liability for GST, as the Apartment was occupied by MJM as his home before his illness made it necessary that he be transferred to a nursing home.

DT’s claim

The thrust of DT’s case was that there was no urgency in the need to sell the Apartment because MJM owned, or could get control over, other property that could be sold to meet his needs in the timeframe required for DT to complete his claim in the Family Court.
That property consisted of MJM’s share in Lexamarque and potential interests that he may be able to obtain in a number of discretionary trusts.

Potential sale of Croydon boarding house

It will be convenient to deal first with the submission that MJM’s share in Lexamarque should be realised before the Apartment is sold.
In response to this suggestion, Ms Huntington swore a further affidavit on 10 December 2020, in which she set out a number of reasons why it is not feasible for MJM’s share in Lexamarque to be realised quickly in a manner that will yield an advantageous price for the Croydon boarding house. I accept Ms Huntington’s evidence, and find that the sale of the share in Lexamarque is not a viable or efficient alternative to the sale of the Apartment.

Control of Lexamarque

First, there is no realistic prospect of MJM selling his share. The only feasible way to get the benefit of the value of that share is for the Croydon boarding house to be sold and the net proceeds of sale distributed by dividend to the two shareholders.
The Croydon boarding house will not be sold unless its directors resolve to do so. Until 31 March 2020, MJM was the sole director of Lexamarque. On that date, Ms Huntington, exercising her power as MJM’s financial manager, caused him to resign as a director and the children of MJM who are Guardians to be appointed as directors. Consequently, it is those two Guardians who have the power as the directors of Lexamarque to decide whether or not to sell the Croydon boarding house.
DT made criticisms of Ms Huntington’s decision to cede control of Lexamarque (and other companies that will be mentioned below) to MJM’s Guardians. Ms Huntington took this step before DT made his claim in the Family Court. The Court is not called upon on this application to consider the appropriateness of Ms Huntington’s conduct in causing MJM to resign as the director of the various companies and to appoint the two Guardians in his stead.
Without the cooperation of the present directors of Lexamarque, Ms Huntington could only procure the sale of the Croydon boarding house if she were able to replace the present directors by herself, or someone who would do her bidding.
Lexamarque has two shares on issue. One is held by MJM and the other is held by Falconet Investments Pty Ltd (Falconet). The constitution of Lexamarque is not in evidence. In the absence of evidence to the contrary, it is reasonable to assume that each of the shares has equal voting power. I will make the same assumption in respect of the constitutions of the other companies referred to below. Consequently, Ms Huntington will not be able to use the voting power attached to MJM’s single share to pass an ordinary resolution to remove the existing directors of Lexamarque. The resolution would need the support of Falconet.
On 31 March 2020, Ms Huntington also signed minutes of a meeting of shareholders of Falconet, in which she caused MJM to resign as the director of Falconet and the two children of MJM who are Guardians were appointed directors of Falconet. Consequently, the directors of Falconet will not cause it to vote in favour of an ordinary resolution to replace themselves as the current directors of Lexamarque unless they choose to do so.
It would therefore be necessary for Ms Huntington to be able to also replace the current directors of Falconet with herself or some other person who would exercise their power as director to cause Falconet to vote at a meeting of the shareholders of Lexamarque in support of MJM’s ordinary resolution to replace the existing directors of that company.
Falconet has 12 shares on issue. Six of those shares are owned by MJM and six shares are owned by Deemkies Pty Ltd (Deemkies). Again, on 31 March 2020, Ms Huntington used her power as MJM’s financial manager to replace him as director of Deemkies by the two Guardians who are MJM’s children.
Ms Huntington would therefore have to seek to replace the current directors of Deemkies with herself or another person who would cooperate with her to vote in favour of an ordinary resolution at a general meeting of the members of Falconet to replace its directors, for the purpose of the new directors causing Falconet to vote in favour of an ordinary resolution at a general meeting of the members of Lexamarque to replace its directors, so that Lexamarque’s new directors could then resolve to sell the Croydon boarding house.

Deemkies has two shares on issue. One share is held by MJM and one share is held by Viegin Pty Ltd (Viegin). The difficulty is that, on 31 March 2020, Ms Huntington also used her power as MJM’s financial manager to replace MJM as the director of Viegin with the two Guardians who are his children. Consequently, again, Ms Huntington will not have sufficient power by exercising MJM’s single share in Viegin to pass an ordinary resolution removing the existing directors and appointing herself or some other cooperative person.
Ms Huntington would therefore have to attempt to replace the directors of Viegin so that she could then replace the directors of Deemkies, so that she could then replace the directors of Falconet, so that she could then replace the directors of Lexamarque, so that she could cause Lexamarque to sell the Croydon boarding house.
It is at this point that an insurmountable problem emerges. While MJM held one of the two shares in Deemkies and Viegin, each of those companies held the second share in the other company. Consequently, the existing directors, who have control over Deemkies’ and Viegin’s share for the purpose of voting at meetings of members of the other company, cannot be removed by anything that Ms Huntington can do by exercising the voting rights attached to MJM’s single share in each of the companies.
It does not matter which meeting of members of Deemkies and Viegin is held first. If Deemkies, the current directors of Viegin can cause it to exercise its vote to defeat an ordinary resolution proposed by Ms Huntington on behalf of MJM, as the resolution will only receive 50% of the votes. The equivalent outcome will apply if the meeting of members of Viegin occurs first.
Consequently, Ms Huntington does not have power to cause Lexamarque to sell the Croydon boarding house unless the current directors of that company decide to do so.

Potential dispute with licensee

Secondly, any attempt to sell the Croydon boarding house is likely to provoke a dispute with the present licensee. The licensee has asserted to Ms Huntington that she has a right of first refusal over the property. There is also a question about the termination of the licence. Although the licence has a five-year term that concludes on 24 December 2020, it also includes a term that “the Parties will in good faith and with reasonableness arrange to renew the Agreement”. A term of that nature may or may not be effective in law, but there may be a litigation risk in ignoring it. In any event, it is not likely to be possible to terminate the licence and eject the occupants without engaging in an onerous attempt to find alternative accommodation for them.

Impediments to sale of Croydon boarding house

Thirdly, the Croydon boarding house requires substantial work before it could be sold at a price that reflected its inherent value. Ms Huntington annexed to her affidavit a professional building report which identified problems that would need to be rectified at some expense. Ms Huntington noted that the consent of the Council would be required before the work could be carried out, and that Ms Huntington does not have funds, as the financial manager of MJM’s estate, to carry out the work. Furthermore, she would require the consent of the directors of Falconet and TAG. Ms Huntington does not have that consent.

DT’s responses

DT responded to these arguments by submitting that the Croydon boarding house simply should be sold as is, even if there are not currently funds to repair the property to obtain an optimal price. He also, rightly, submitted that the evidence that the current licensee has enforceable rights after that termination of the licence is deficient. He also said that there is no evidence that the current directors of Lexamarque will decline to sell the Croydon boarding house.
First, I do not accept that Ms Huntington should be forced, by the Court having made the orders sought by DT in his notice of motion, to try to procure the sale of the Croydon boarding house on a basis that does not facilitate an optimal return to Lexamarque. DT’s submissions were directed at establishing that there were alternative sources of funds to provide care for MJM to the sale of the Apartment. The submissions did not address the issue of why other property should be realised for the ultimate benefit of DT and to the disadvantage of other parties who might, by ownership or being beneficiaries of a trust, suffer by reason of the application of property to the cost of the care required by MJM. If Lexamarque sells the Croydon property for a price that is not the best price achievable in the market, both MJM’s estate and Falconet will suffer. If the assets of the discretionary trusts are applied for MJM’s benefit, assuming that can be done, then those assets will not be available for distribution to the other beneficiaries. DT’s case does not establish why the Court should make orders that prefer his interests over the other parties’ interests. It may be that the Family Court has power to make orders that have that effect, but this Court does not without a proper reason in principle.
I accept that, as a matter of strict legal principle, the present licensee of the Croydon nursing home may not have all of the rights that she claims. But even if it were possible for Ms Huntington to cause the sale of the Croydon boarding house, I would not make orders that had the practical effect of requiring her to take that course, because I perceive there to be a real risk that Lexamarque would become involved in contentious litigation.
Finally, in response to DT’s submission that there is no evidence that the current directors of Lexamarque will not agree to sell the Croydon boarding house, I consider that it is to be strongly implied from the course that Ms Huntington has taken in these proceedings that the directors are not prepared to do so.

Potential distributions from discretionary trusts

The other source of funds suggested by DT was a number of discretionary trusts. They are The Falconet Foundation, The Ascot Family Trust, The Chintolo Family Trust and The Harriet Foundation.
It is not necessary for the Court to make precise findings concerning the value of the assets of each of these trusts. Taking the estimations given in DT’s submissions, the trusts listed in the preceding paragraph have assets respectively valued at $4,400,000, $4,286,500, $2,000,000 and $472,000. I have not given attention to the financial statements of the companies, and I have not ignored the observation made on behalf of DT that the evidence does not necessarily establish that the assets owned by the trustee companies are held on the trusts. The nature of this application does not require MJM to prove strictly all relevant facts concerning the constitution and affairs of the trusts. It is proper for the Court to proceed upon the basis that the trusts own the assets that they appear to own.
It is sufficient to record that the assets of the trusts collectively, and in the case of at least the first three trusts individually, are sufficient to fund the costs of MJM’s care for the period necessary to enable the Family Court to complete the hearing of DT’s claim.
The question is whether Ms Huntington, on behalf of MJM, can, in a reasonably certain and timely way, gain benefits from the trusts sufficient to meet the costs of MJM’s care. (An affirmative answer to that question should not end the matter, because, as I have observed above, there is a subsidiary question of whether it has been demonstrated that DT’s benefit should be given preference over the needs of the beneficiaries of the trusts).
The trust deeds that govern the first three trusts are in evidence. The trust deed for the Harriet Foundation is not. The three trust deeds are in materially identical terms. That suggests that it is likely that the trust deed for the Harriet Foundation is in the same terms.
By clause 5.3 to 5.6 of the trust deeds, the trustee is given discretionary powers to apply the trust fund in various ways for the benefit of “the prospective beneficiaries”.
MJM is not included in the schedule of prospective beneficiaries for any of the trusts in respect of which the trust deed is available.
Clause 5.1.2 authorises the appointor of the trust to appoint additional persons as prospective beneficiaries, but clause 5.1.3 prevents any person being appointed as such “who is or has ever been a trustee or appointor or settlor or subsequent donor for purposes of the trust”. Clause 5.8 contains a general exclusion of the provision of benefits to certain classes of persons including those described in clause 5.1.3. Ms Huntington understands that MJM falls within the definition of “subsequent donor” because the settlor in each case created the trust by settling a small sum on the trustee, and, so far as it is known, the assets that have been transferred to the trustee of each of the trusts were previously owned by MJM.
DT has challenged the proposition that MJM was ineligible to be made a prospective beneficiary, because there was no evidence that MJM had donated assets to the trusts. There is no such specific evidence, but there is no evidence that would suggest a possibility that any other person had donated the trusts’ assets, save for the small original settlement sums. The fact that MJM’s name is not included in the lists of prospective beneficiaries also provides some support for a conclusion that it was not intended that he benefit from the trusts.
In any event, it would be necessary for the appointors under the trusts to resolve to make MJM a prospective beneficiary.
Falconet is the appointor for The Falconet Foundation. The current directors of Falconet are the Guardians who are MJM’s children, as explained above. Also as explained, Ms Huntington does not have power to change the current directors of that company.
MJM is the appointor for The Ascot Family Trust and The Chintolo Family Trust. The appointor of the Harriet Foundation does not appear to be known.
By clause 6.4.2, MJM ceased to be a valid appointor when he became of unsound mind. Clause 6.4.4 has the effect that, when MJM ceased to be appointor, the trustee of the trust became appointor in his stead.
As mentioned, the trustee of The Falconet Foundation is Falconet. The trustee of The Ascot Family Trust is Ascot Properties Pty Ltd (Ascot). The trustee of the Chintolo Family Trust is Chintolo Pty Ltd (Chintolo). The trustee of the Harriet Foundation is Viegin.
I have already explained above that, from 31 March 2020, MJM has not been a director of Falconet and Viegin. The position is the same for Ascot and Chintolo. The current directors of those companies are the two children of MJM who are Guardians.
The shares in Chintolo are owned by Viegin and Deemkies as to one share each. The shares in Ascot are owned as to one share by Falconet and one share by Deemkies.
It is not necessary to go through the whole process again, but the fact is that Ms Huntington does not have power to change the directors of the trustee companies to persons who would, at her direction, add MJM as a prospective beneficiary (assuming that MJM was a valid candidate, which does not appear to be the case), or exercise the trustees’ discretion to make distributions that would benefit MJM.
In this respect, it is to be noted that Deemkies and Viegin are already prospective beneficiaries of The Ascot Family Trust, and Viegin is a prospective beneficiary of the Chintolo Family Trust.
It would be permitted for the trustees of those trusts to exercise their discretion to make distributions in favour of those companies. The problem remains that the current directors control the trustees, and Ms Huntington does not have power to unilaterally change that position.
In any event, if distributions could be made to Deemkies and Viegin, and were made, it would be a matter for the current directors of those companies to decide whether to declare dividends in favour of the shareholders. Those directors may not do so.

Consideration

As MJM’s estate is now under the control of the Court in its Protective List, it would not be appropriate, in my opinion, for the Court to make an order cross-vesting these proceedings to the Family Court. Specifically, I am not of the opinion that it is more appropriate that this proceeding be determined by the Family Court, having regard to the interests of justice, so as to justify the transfer this proceeding to that Court. That is not appropriate in principle, as it would have the practical effect of the Court cross-vesting to another court the power to determine the terms on which the Apartment could be sold. The Apartment is the principal readily saleable asset of MJM. This Court should not retain ultimate responsibility for the management of MJM’s affairs, while putting beyond its immediate power the ability to make orders necessary to realise MJM’s property to meet his needs. In short, this Court should not outsource that power to the Family Court, when it knows that, in the proper exercise of the Family Court’s jurisdiction, it will not be primarily concerned with the proper management of MJM’s financial affairs, given his incapacity.
I am also satisfied that the Court should not stay these proceedings pending the determination of DT’s Family Court proceedings.
My principal reason for that conclusion is that, as explained above, the Apartment is now the only substantial asset in MJM’s estate that Ms Huntington has within her power to realise promptly for the purpose of providing a source of the substantial amount of funds necessary to pay for the level of care that the Guardians in association with Ms Huntington have decided is appropriate for MJM’s needs.
The substantial cause for that outcome is that Ms Huntington does not have the unilateral power to regain control of the boards of directors of relevant companies.
DT submitted that the Family Court has powers that, so to speak, allow the Family Court to look through the technical barriers between the ownership of the Croydon boarding house and the assets of the trusts and to make orders for the conferral of property on DT, as if those assets were the property of MJM. This Court is not familiar with those powers and it is not necessary to attempt to determine in any provisional way whether there are such powers and whether they may avail DT in the Family Court. Even if the Family Court has those powers, it is clear that this Court does not.
DT’s submissions prove that these other assets may be available to be the subject of orders in his favour in the Family Court. It may also be that the Family Court can make orders in favour of DT out of the balance of the proceeds of sale of the Apartment that are not used to fund MJM’s care needs.
This Court should not make the procedural orders sought by DT in his notice of motion for the collateral purpose of preserving the Apartment as an asset of MJM in specie, when it will have to be sold anyway. Nor should it do so where MJM has already sought interim relief in the Family Court that, if granted, would have the result that he achieves the interlocutory outcome that he seeks from the court that is given the positive jurisdiction to make such orders.
It is proper that DT be left to pursue his rights in the Family Court, whether interim or final. DT has not established that satisfactory interim relief is not available in that Court. If it is not available, that will be because of the limitations in the jurisdiction of the Family Court. That may be unfortunate, but it is not a ground for this Court to exercise its powers to achieve collaterally an outcome that cannot be achieved in the Family Court, if that be the case.

Orders

Accordingly, I order that DT’s notice of motion be dismissed.
It should follow that MJM is entitled to an order for his costs of the notice of motion. However, I will give DT the opportunity to advise my Associate whether he wishes to challenge that outcome.
It is not clear to me what the parties believe will follow the dismissal of DT’s notice of motion in regard to the outcome of MJM’s summons seeking an order for possession of the Apartment against DT. Particularly given the time of the year, I think DT should be given a reasonably significant period to vacate the Apartment. The parties should confer on this issue and advise my Associate as to their positions.
I note that DT has not sought an order staying the order for possession to be made against him for a short period necessary to enable him to make an application for interim relief in the Family Court.

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Decision last updated: 18 December 2020

Medium Neutral Citation:	MJM v DT [2020] NSWSC 1881
Hearing dates:	9 and 14 December 2020
Date of orders:	18 December 2020
Decision date:	18 December 2020
Jurisdiction:	Equity - Duty List
Before:	Robb J
Decision:	Order that the applicant’s notice of motion be dismissed. See also [93] and [94] below.
Catchwords:	CORPORATIONS — Directors and officers — Authority and powers — whether assets may be accessed — where the allocation of shares is such that there is not enough voting power to do so. CIVIL PROCEDURE — Cross-vesting — Transfer to Family Court of Australia — Relevant factors — where interim relief has already been sought in the Family Court of Australia that would achieve the interlocutory outcome sought in this Court — transfer order refused.
Legislation Cited:	Family Law Act 1975 (Cth) Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) NSW Trustee and Guardian Act 2009 (NSW)
Cases Cited:	Norton & Locke (2013) FLC 93-567; [2013] FamCAFC 202
Category:	Procedural and other rulings
Parties:	MJM (plaintiff) DT (defendant)
Representation:	Counsel: J Ireland (sol) (plaintiff / respondent) E Cohen (defendant / applicant) Solicitors: McGirr Lawyers (plaintiff / respondent) Livingston & Company Lawyers (defendant / applicant)
File Number(s):	2020 / 344898