MORCOS & LINDON
[2021] FamCA 418
FAMILY COURT OF AUSTRALIA
| MORCOS & LINDON | [2021] FamCA 418 |
| FAMILY LAW – PRACTICE AND PROCEDURE – joinder of party – injunction sought against party proposed to be joined – joinder ordered – injunction granted. |
| Family Law Rules 2004 (Cth) rr 6.02, 6.03 |
| A v Hayden (1984) 156 CLR 532 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Australian Broadcasting Corporation v O’Neill (2002) 227 CLR 57 Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425 Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65 Calverley v Green (1984) 155 CLR 242 Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 Dyer v Dyer [1788] 30 ER 42 Epitoma Pty Ltd v Australasian Meat Industry Employees Union (1984) 3 FCR 55 In Marriage of Yunghanns (1999) 24 Fam LR 400 Patrick Stevedores Operations No. 2 Pty Ltd v Maritime Union of Australia (No. 3) (1998) 195 CLR 1 Smethurst v Commissioner of Police (2020) 94 ALJR 502 Stanford v Stanford (2012) 247 CLR 108 Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283 The Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278 |
| APPLICANT: | Mr Morcos |
| RESPONDENT: | Ms Lindon |
| FILE NUMBER: | MLC | 209 | of | 2020 |
| DATE DELIVERED: | 22 June 2021 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 8 June 2021 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Not applicable |
| COUNSEL FOR THE RESPONDENT: | Not applicable |
| SOLICITOR FOR THE RESPONDENT: | Zeno Lawyers |
Orders
Pursuant to Rules 6.02 and 6.03 of the Family Law Rules the executor of the estate of the late Ms B, deceased in 2010, is joined to this proceeding as the second respondent.
The executor of the estate of the late Ms B must forthwith provide the following documents within 21 days to the solicitor for the respondent wife –
(a) personal ATO assessments of the late Ms B from 1994 to 2010;
(b) the contract of sale of business, transfer of shares document between the applicant husband and the late Ms B;
(c) particulars of consideration, if any, paid by the late Ms B for the shares in C Pty Ltd;
(d) sale of business contract for C Pty Ltd, if any, between the applicant husband and the late Ms B;
(e) all documents filed with the Supreme Court of Victoria in obtaining the probate including any and all correspondence, requisition notices, court documents and the like;
(f) any previous wills executed by the late Ms B; and
(g) all lease documents pertaining to D Street, Suburb E in the State of Victoria between 1999 and 2021.
The applicant husband and the executor of the estate of the late Ms B are restrained from dealing, disposing, encumbering or otherwise transferring any and all legal or equitable interests in the property situated at D Street, Suburb E, in the State of Victoria, certificate of title volume … folio …, until further order of the court.
The applicant husband is restrained from transferring, assigning, selling, disposing or otherwise dealing with his interest in the company C Pty Ltd.
On or before 4pm on 23 August 2021 the respondent wife must file and serve a statement of claim against the applicant husband and the executor setting out her claims in a properly pleaded, fully particularised way.
On or before 4pm on 25 October 2021 the applicant husband and the executor must file and serve their responses.
The respondent wife’s costs are reserved.
This proceeding is referred to the docketed registrar for ongoing case management.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Morcos & Lindon has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 209 of 2020
| Mr Morcos |
Applicant
And
| Ms Lindon |
Respondent
REASONS FOR JUDGMENT
Introduction
Pursuant to orders made by the Honourable the Chief Justice on 3 June 2021, the respondent’s application in a case filed 18 February 2021 was referred to me to be addressed on 8 June 2021. I heard the matter as a contested interlocutory application by which the respondent sought orders pursuant to Rules 6.02 and 6.03 of the Family Law Rules that the executor of the estate of the late Ms B (“the estate”) be joined as a party to this proceeding and for other relief. The applicant is the executor of the estate, as was common cause. The applicant’s children are beneficiaries under the will of the deceased Ms B who was the applicant’s mother (“the deceased”).
In essence, the respondent, formerly the applicant’s wife, contends that the land and improvements known as and situated at D Street, Suburb E being the whole of the land described in certificate of title volume … folio … (“the property”) was purchased using joint matrimonial funds. The applicant argues that the property was acquired by the deceased during her lifetime using her own funds. According to the respondent, the respondent has an equitable interest in the property. She wishes to bring that equitable interest to account in this alteration of property interests case. Conversely, the applicant says the property was acquired solely from the application of the deceased’s own finances so the respondent has no interest in the property, so he says.
In addition, the respondent pressed for orders restraining the applicant from dealing with his interest in C Pty Ltd.
The applicant argued that he should not be so restrained.
Synopsis
For the reasons that follow, in my view –
a)the executor of the estate of the deceased should be joined as a party for the simple reason that the identity of the party who acquired the legal and beneficial interest in the property is a fact in issue in this case requiring a determination in accordance with principles espoused in Stanford v Stanford;[1] and
b)the balance of convenience favours the grant of an injunction to restrain the applicant’s dealing with his interest in C Pty Ltd, there being a serious issue to be tried in relation to his interest.[2]
[1] (2012) 247 CLR 108.
[2] Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, American Cyanamid Co v Ethicon Ltd [1975] AC 396, Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425, Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283, A v Hayden (1984) 156 CLR 532, Epitoma Pty Ltd v Australasian Meat Industry Employees Union (1984) 3 FCR 55, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1, Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65, In Marriage of Yunghanns (1999) 24 Fam LR 400, Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135, Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, Australian Broadcasting Corporation v O’Neill (2002) 227 CLR 57, Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 and Smethurst v Commissioner of Police (2020) 94 ALJR 502.
Short factual narration
The respondent made an affidavit on 28 August 2020 as well as one on 17 February 2021 for the purposes of this application. Relevantly distilled, in the respondent’s affidavit made 28 August 2020, she stated as follows –
a)she met the applicant in May 1992 and they commenced cohabiting in June 1993;
b)they married in 1994;
c)in late 1995, their first daughter was born;
d)the applicant petitioned for his own bankruptcy in 1999; and
e)in early 1997 the couple’s second daughter was born.
So far as the acquisition of the property was concerned the respondent stated that in August or September 1996 the property was listed for auction. She said the applicant had expressed interest in purchasing the property. She stated in her affidavit that she attended the auction and participated in the bidding for the property. She said the property was knocked down to her as the successful bidder. She said she attended the auction in the first place because the respondent was not confident that the applicant had an adequate command of the English language. She said the following –
We agreed on how much I was to bid and what deal we would make with the owner. We agreed on our upper offer and I would also offer a cash deposit as an incentive.
She said at that point in time she and the applicant had not approached a prospective mortgagee or agreed on the amount to be financed.
She emphatically denied that the property was purchased on behalf of, or for the benefit of the deceased. She said she executed the purchase contract in her own name “and/or nominee”, although she did not exhibit a copy of the contract. She said the applicant’s mother was not in Australia as at the date of purchase.
The respondent’s evidence about the provision of the settlement proceeds and the identity of the signatory of the purchaser was peculiar. She deposed to the following –
When the property settlement concluded [the applicant] informed me his mother would be on the title because of his legal issues with his ex-wife and his bankruptcy. I was not in agreement with this but had no choice as he signed the transfer and associated documents as his mother’s power of attorney. At the time I asked [the applicant] if his mother died how was he going to ensure the building and business was going to come back to him and he said not to worry as he had a will drawn up for his mother and he would inherit the building from her. I asked him what would happen if any of his siblings contested this and he said his siblings knew he had paid for the building and would not contest the will he had drawn up.
The respondent provided no documentary evidence about the source of funds for the acquisition of the property, whether as to the deposit, the sum provided by the mortgagee or the sum provided by the applicant and respondent. That will be an important issue in the evidence at the trial of this proceeding. However, the respondent did say the following –
I deny that the D Street property was purchased on behalf of [the applicant’s] mother. All purchase monies for the D Street property were paid for in cash from moneys from the Business. [The applicant’s] mother had nothing to do with the shop or the accounts. [The applicant’s] mother could not speak English nor could she do any basic arithmetic as she went to primary school only in a village school and could read and write [her native language] at a very basic level only. In addition, [the applicant’s] mother spent very little time in Australia.
It seemed that the respondent asserted an entitlement to the property by reason of her connection to “the business”, being C Pty Ltd, of which she said she was one of its directors. According to an historic company search of C Pty Ltd, in December 1995 the respondent was a shareholder in C Pty Ltd. The precise circumstances in which the respondent ceased to be a shareholder in C Pty Ltd were not given.
The respondent stated that in 1999 the applicant “arranged to transfer the business into her name[3] by resigning as a director and making her a director on 12 July 1999 and transferred his shares to her in 2001.”
[3] That is to say into the deceased’s name when she was alive.
A significant amount of the factual situation in relation to the deceased’s acquisition of the property was unexplained, yet curious. For example, the mortgagor of the fee simple estate in the property in January 1999 was the deceased. She could only have been the mortgagor of the fee simple estate in the property if she was the registered proprietor of that property. Precisely how the applicant’s mother came to be the registered proprietor was unexplained especially in circumstances where the respondent executed the contract to purchase the property. Even accepting the respondent’s evidence that the contract contained a nominee clause, no evidence was adduced that the respondent nominated the applicant’s mother as a purchaser.
The applicant’s evidence
The applicant made an affidavit in June 2020 as well as an affidavit in March 2021. In his June 2020 affidavit, the applicant stated (relevantly paraphrased) as follows –
a)in or around mid-1998[4] the property at D Street, Suburb E was listed for auction;
b)the applicant discussed with his mother her purchasing the property;
c)on 30 September 1998 the auction of the property was held;
d)the applicant and the respondent attended the auction together with a real estate agent by the name of Mr F;
e)the applicant bid[5] for the property and purchased it;[6]
f)all proceeds were provided by the applicant’s mother; and
g)he resigned as a director of C Pty Ltd on 14 July 1999 and he ceased to be a shareholder.
[4] The respondent said 1996.
[5] The respondent said she did the bidding as the applicant’s command of English was poor.
[6] The respondent said she purchased the property in her name and she included a nominee clause.
Self-evidently, a significant conflict in the evidence of the applicant emerged when compared to the evidence of the respondent on those limited matters.
On the hearing of this interlocutory application it was not possible to reliably assess which version was more probable than not.
So far as the applicant’s March 2021 affidavit was concerned, in it the applicant put forward his version of the ownership of C Pty Ltd as well as his version of the circumstances of the auction at which the property was acquired. His affidavits, like the respondent’s, were not prepared with legal assistance. The applicant’s affidavits were in a form more akin to a proceeding in the Supreme Court rather than a proceeding in this court. Be that as it may, the applicant asserted that C Pty Ltd was not his company and that since 14 July 1999 C Pty Ltd was his mother’s. He seemed to have been addressing the identity of the shareholding in C Pty Ltd yet he gave no information leading to his conclusion that C Pty Ltd was his mother’s, inferentially, that she held the majority of the issued shares in the capital of C Pty Ltd.
So far as the events at the day of the auction to purchase the property were concerned, the applicant stated that Mr F was with the applicant. The applicant said there was no mention of the respondent’s name being placed on the title. The applicant said his mother’s money was used to purchase the property. He asserted that $104,000 was provided from his mother’s passbook account. No contract was exhibited. He said he held a power of attorney.
A direct conflict in the versions of events emerged. The real estate agent, Mr F, has not made an affidavit. The applicant has not produced the power of attorney pursuant to which he allegedly executed documents on behalf of his mother. Conveyancing documents have not been produced. As against the applicant’s assertions, the respondent stated as follows in paragraph 4 of her 17 February 2021 affidavit –
The Husband deposes he purchased the property on behalf of and for the benefit of his mother. This is not true. I refer to paragraphs 31 to 33 of my Affidavit e-filed on 28 August 2020. I further say that the Husband refused to register the property in my name as the monies used to purchase the property were from his savings. He would quite frequently tell me that the [D Street] property was his by saying ‘this is mine, this is mine’ and ‘I used the money I earned all over my life’. The Husband had broken English. I clearly remember those words being uttered from his mouth as he would not only say those words to me but also his family and close friends. I did not have a say nor could I object to the property being registered in the Husband’s mother’s name.
The respondent may well be using untrained language to advance a claim of undue influence. At this stage it is difficult to tell.
The respondent explained her concerns in relation to the fate of the property. She stated that the applicant informed her that under the will of his late mother, the property passes to the applicant. The respondent stated that according to the will attached to the grant of probate, the beneficiaries listed are the children of the applicant’s first marriage. She stated that the property was a matrimonial asset. She sought an order enjoining the applicant from dealing with the property.
The respondent asserted that the will is a forgery. The respondent also stated that the source of funds for the deposit was money from the business of which the respondent had an interest as shareholder up to a particular point in time. It seemed to me that the respondent was contending, albeit obtusely, that she and the applicant contributed funds to the business and that a portion of those funds were applied in the purchase of the property. On that analysis, the respondent may at trial be able to make out a claim to an equitable interest in the property.[7]
[7] Calverley v Green (1984) 155 CLR 242, The Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278 and Dyer v Dyer [1788] 30 ER 42.
The position in relation to the control of C Pty Ltd was not the subject of direct evidence. According to the respondent, the applicant asserted that his mother was the sole or majority shareholder of the issued shares in the capital of C Pty Ltd. The respondent was unable to offer contradictory evidence. Proceeding on the assumption of the truth of that position, upon the applicant’s mother’s death the executor of her estate (the applicant) became seized of the assets of the deceased and should, behaving properly in accordance with fiduciary duties owed by an executor to beneficiaries under the relevant will, have held those assets to be distributed in accordance with the will. The respondent asserts the will is a forgery. That must be tested at trial. The applicant is executor under the will. If the will is a forgery then the capacity of the executor to perform any functions in pursuance of the will must be in doubt. Further, the balance of convenience is in favour of preserving the status quo by the grant of an injunction in circumstances where the legitimacy of the will is in question, at least in the context of a quia timet injunction application.
In debate before me the applicant was emphatic that the money to purchase the property was his mother’s. He was equally emphatic that a high degree of hostility and enmity existed between his late mother and the respondent. Irrespective, the serious issue to be tried is the legitimacy of the will, said to be a forgery. That issue must be tried.
Disclosure
The respondent complained about outstanding disclosure issues. The categories of documents said to have been the subject of inadequate discovery was not exceptional. Those documents should have been discovered. I make the disclosure order sought.
Conclusion
Orders will be made joining the executor of the estate of the late Ms B to this proceeding, as a respondent pursuant to Rules 6.02 and 6.03 of the Family Law Rules.
Orders will also be made enjoining the executor from disposing of or dealing with the property until the hearing and determination of this proceeding or further order.
Orders will be made enjoining the executor from transferring, assigning, selling, disposing or otherwise dealing with his interest in C Pty Ltd.
I direct the respondent to file and serve a statement of claim against the applicant and the executor setting out her claims in a properly pleaded, fully particularised way by 4pm on 23 August 2021. The applicant and the executor will have a further two months thereafter to file and serve their responses, namely 25 October 2021.
The proceeding is otherwise referred to the docketed registrar for ongoing case management.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 22 June 2021.
Associate:
Date: 22 June 2021
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