Olindo & Donati
[2023] FedCFamC2F 1367
•30 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Olindo & Donati [2023] FedCFamC2F 1367
File number(s): ADC 3022 of 2021 Judgment of: JUDGE PARKER Date of judgment: 30 October 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – joinder – application by the husband for joinder of wife’s current partner and wife’s mother – where husband alleges that proposed additional parties have colluded with wife to keep matrimonial assets from his reach – where husband has not established a properly particularised claim against either of the proposed additional parties – joinder refused Legislation: Family Law Act 1975 (Cth) ss 78, 79, 90AE, 90AF, 106B
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01, 3.03
Cases cited: A Bank & Coleiro and Anor [2011] FamCAFC 157
Aroney & Aroney [1979] FamCA 62; (1979) FLC ¶90-709
Ascot Investments Pty Ltd & Harper [1981] HCA 1; (1981) 148 CLR 337
Ashton & Ashton [1986] FamCA 20; (1986) FLC ¶91-777
B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113; (2008) FLC ¶93-380
Bigg & Suzi [1998] FamCA 14; (1998) FLC ¶92-799
Bonnici & Bonnici [1991] FamCA 86; (1992) FLC ¶92-272
Carter & Carter [1981] FamCA 18; (1981) FLC ¶91-061
Davidson & Davidson [1990] FamCA 187; (1991) FLC ¶92-197
Gelley & Gelley (No 2) [1992] FamCA 84; (1992) FLC ¶92-291
Goodwin & Goodwin Alpe [1990] FamCA 147; (1991) FLC ¶92-192
Gormley & Gormley [2023] FedCFamC1F 296
Gould & Gould & Swire Investments [1993] FamCA 126; (1993) FLC ¶92-434
Hall & Hall [2016] HCA 23; (2016) 257 CLR 490
Hancock Family Memorial Foundation Ltd v Fieldhouse [2010] WASC 223
Hankinson & De Vries & Ors [2013] FamCA 455
Heath & Heath & Westpac Banking Corporation (No 2) [1984] FamCA 17 (1984) FLC ¶91-517
Helsinki & Bassett [2022] FCWA 275
Jabour & Jabour [2019] FamCAFC 78; (2019) FLC ¶93–898
John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Kennon & Spry [2008] HCA 56; (2008) 238 CLR 366
Kessey & Kessey [1994] FamCA 162; (1994) FLC ¶92-495
Lanceley & Lanceley [1994] FamCA 94; (1994) FLC ¶92-491
Messana & Messana [2023] FedCFamC1F 365
Napthali & Napthali [1988] FamCA 9; (1989) FLC ¶92-021
Pencious & Pencious [2010] FamCA 605
Pflugradt & Pflugradt [1981] FamCA 23; (1981) FLC ¶91-052
Rigby & Kingston [2020] FamCA 415
Sieling & Sieling [1979] FamCA 23; (1979) FLC ¶90-627
Singerson & Joans [2014] FamCAFC 238
Southern & Southern [2017] FamCA 128
Southwell & Jane [2011] FamCA 663
Stacy & Stacy [1977] FamCA 104; (1977) FLC ¶90-324
Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108
Stopford Malloy & Malloy [2021] FamCA 100
Stowe & Stowe [1980] FamCA 92; (1981) FLC ¶91-027
Tadgell & Hahn and Anor [2013] FamCAFC 23
Toma & Doyle (No 2) [2023] FedCFamC1F 477
Townsend & Townsend [1994] FamCA 144; (1995) FLC ¶92-569
Waugh & Waugh [2000] FamCA 1183; (2000) FLC ¶93-052
Wayne & Dillon and Anor [2008] FamCAFC 204
Wray & Wray [1981] FamCA 37; (1981) FLC ¶91-059
Division: Division 2 Family Law Number of paragraphs: 126 Date of hearing: 2 August and 24 October 2023 Place: Adelaide Counsel for the Applicant: Mr Dillon Solicitor for the Applicant: Marciano Lawyers Counsel for the Respondent: Ms Clark SC Solicitor for the Respondent: Norman Waterhouse Lawyers Counsel for the Proposed Second Respondent: Mr Richards Solicitor for the Proposed Second Respondent: Howe Jenkin Solicitor Advocate for the Proposed Third Respondent: Mr Jordan Solicitor for the Proposed Third Respondent: Jordan & Fowler ORDERS
ADC 3022 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR OLINDO
Applicant
AND:
AND:
AND:
MS DONATI
Respondent
MR MEADE
Proposed Second Respondent
MS B DONATI
Proposed Third Respondent
ORDER MADE BY:
JUDGE PARKER
DATE OF ORDER:
30 OCTOBER 2023
UPON NOTING THAT:
A.Mr Meade, being the registered proprietor of the properties at B Street, Suburb C, South Australia and D Street, Suburb E, South Australia has advised the Court via his legal representative of his consent to valuations of those properties being undertaken for the purpose of these proceedings.
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed by the Husband on 29 May 2023 is dismissed.
2.The Statement of Claim filed by the Husband on 1 August 2023 is struck out.
3.Any application for costs be filed and served within 28 days of the date of these orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE PARKER:
INTRODUCTION
The Husband, MR OLINDO, and the Wife, MS DONATI (collectively ‘the spouse parties’) are parties to proceedings relating to alteration of the property interests of the parties pursuant to section 79 of the Family Law Act 1975 (Cth) (‘the Act’).
By Application in a Proceeding filed on 29 May 2023, the Husband, who is the Respondent in the substantive proceedings, seeks that two additional Respondents be joined to the proceedings. Leave to add the additional proposed Respondents is sought pursuant to rule r 3.03(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’).
The Husband and the Wife were married in 2003 and commenced cohabitation on that date. They separated on 16 April 2020.
The proposed additional Respondents are the Wife’s de facto partner, MR MEADE and the Wife’s mother, MS B DONATI.
The application is opposed by the Wife and by each of the proposed additional Respondents.
In support of his application, in addition to an affidavit filed contemporaneously with it, the Husband relied on a document entitled Statement of Claim filed on 1 August 2023 in partial compliance with an order made on 30 May 2023. That document contained a number of matters in the nature of evidence and submissions had attached to it a number of supporting documents in the nature of annexures, which were not formally in evidence before the Court. No objection was taken to the Husband’s reliance on those documents. The Husband also relied upon submissions filed on 1 September 2023.
The Wife relied upon written submissions filed on 30 August 2023 and 18 October 2023.
Ms B Donati relied upon written submissions filed on 2 August 2023 and 18 October 2023.
Mr Meade relied upon written submissions filed on 19 October 2023.
THE APPLICABLE LEGAL PRINCIPLES
Joinder applications are governed by rule 3.01 of the Rules, which provides:
3.01 Necessary parties
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
The requirements of rule 3.01 are conjunctive. A person must be included as a party to a proceeding if their rights may be directly affected by an issue in the proceeding and their participation as a party is necessary for the Court to determine all issues in dispute.[1] If both aspects of the rule are satisfied, joinder is mandated.
[1] Pencious & Pencious [2010] FamCA 605; Messana & Messana [2023] FedCFamC1F 365.
The Husband, as the Applicant, bears the onus of demonstrating that both limbs of rule 3.01 are satisfied.
In general, as the High Court of Australia held in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd,[2] where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. As such, it has been said that the second limb of the rule adds little to the first.[3]
[2] [2010] HCA 19; (2010) 241 CLR 1 at [131].
[3] Stopford Malloy & Malloy [2021] FamCA 100 at [34].
The inclusion of the word ‘necessary’ in r 3.01 is nonetheless significant. As Warnick J said in the context of consideration of a previous rule in similar terms in Wayne & Dillon & Anor,[4] that word must mean something more than ‘useful’ or ‘expeditious’.
[4] [2008] FamCAFC 204 at [18] (‘Wayne & Dillon’).
The Full Court of the Family Court of Australia (‘the Full Court’) confirmed in A Bank & Coleiro and Anor[5] that joinder does not require that an order be sought against the party proposed to be joined, and it has been recognised that a third person might be affected by an order though not directly the subject of it.[6] Nonetheless, the question of whether an order is sought against the party proposed to be joined has been described as a ‘critical consideration.’[7]
[5] [2011] FamCAFC 157 at [101]-[102].
[6] Wayne & Dillon and Anor [2008] FamCAFC 204 at [11].
[7] Gormley & Gormley [2023] FedCFamC1F 296 at [38].
As the Full Court held in Wayne & Dillon,[8] 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. This is consistent with authority to the effect that where a party seeks relief against another person, then that person should be named as a respondent.[9]
[8] At [19].
[9] Gould & Gould & Swire Investments [1993] FamCA 126; (1993) FLC ¶92-434.
Any person proposed to be joined to a proceeding ought be able to take advice on whether the facts pleaded (if established) would lead to a successful claim.[10] The case put against the third party must be be sufficiently arguable to withstand a summary dismissal application,[11] meaning that the Court must consider whether the applicant for joinder has a reasonable Suburb E of success in their claim against the third party,[12] noting that on a summary dismissal application the evidence of the applicant for joinder would be taken at its highest.[13]
[10] Wayne & Dillon and Anor [2008] FamCAFC 204 at [17].
[11] Hancock Family Memorial Foundation Ltd v Fieldhouse [2010] WASC 223 at [27]).
[12] Tadgell & Hahn and Anor [2013] FamCAFC 23.
[13] Bigg & Suzi [1998] FamCA 14; (1998) FLC ¶92-799.
The Full Court in B Pty Ltd and Ors & K and Anor[14] held as follows:
“We do not accept that it is proper to allow joinder of third parties merely upon the formulation of a paragraph in, or to be added to, an application, on the basis that at trial facts to support the application may be asserted and proved. Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.”
[14] [2008] FamCAFC 113; (2008) FLC ¶93-380.
The relevant authorities reveal that in general, where the claim made by the party seeking joinder is that some asset or interest held by the third party is beneficially owned by the other party to the proceedings or should be added back and included in the assets to be divided for the purpose of calculations, but where no relief is sought against them, such as by way of transfer, their participation in the proceedings may not be necessary.[15]
[15] See, for example, Hankinson & De Vries & Ors [2013] FamCA 455; Pencious & Pencious [2010] FamCA 605.
As the Full Court held in Wayne & Dillon,[16] if there are other available means of obtaining what is needed to enable the applicant for joinder to establish an identified case (such as subpoenas or answers to specific questions), joinder is unlikely to be 'necessary' in the relevant sense. The fact that disclosure may be more efficiently obtained does not of itself provide an appropriate basis for joinder as a party to the proceedings.[17] Indeed, joinder for the sole purpose of obtaining disclosure has been held to be an improper purpose.[18]
[16] [2008] FamCAFC 204 at [18].
[17] Southern & Southern [2017] FamCA 128 at [9].
[18] Rigby & Kingston [2020] FamCA 415 at [43].
THE HUSBAND’S CASE
By way of his Response to Initiating Application filed on 5 November 2021, the Husband sought that ‘there be a division of the matrimonial asset pool 60/40% in favour of the husband.’ He did not in that document, and has not since, particularised the final relief he seeks.
The affidavit relied upon by the Husband in support of his Response set out[19] the assets and liabilities which the Husband asserted were required to be taken into account in the property settlement proceedings between the Husband and the Wife. That list did not include any of the assets in relation to which he now asserts that joinder is necessary. The extent, if any, to which the Husband’s claim to 60% of the matrimonial asset pool would be modified were those assets to be taken into account as part of that pool has not been articulated by him.
[19] At paragraph [31].
In support of his application for joinder, the Husband alleges that the proposed additional Respondents have deliberately participated in causing assets and/or financial resources to be sold, transferred, concealed and depleted; causing a reduction in the pool of assets available for distribution between the spouse parties; and that in the absence of joinder, they ‘will continue to have control and claim over matrimonial assets to the detriment of the [Husband] so as to deliberately diminish the matrimonial asset pool.’ He also argues that ‘the property asset pool is directly affected by their financial association with the [Wife] and, as a result, they should be included as parties to the case.’
THE PROPOSED SECOND RESPONDENT
The Husband alleges that the Wife commenced her relationship with Mr Meade prior to the separation of the spouse parties and that Mr Meade now owns property that was acquired with matrimonial funds of the spouse parties.
The Husband further alleges that the Wife ‘deliberately colluded’ with Mr Meade to set aside part of the sum of $1,000,000 which he asserts was (or was intended to be or should have been) gifted to the Wife by Ms B Donati, being funds which the Husband asserts are ‘matrimonial funds’, and applied those funds to the purchase of properties in Suburb C, South Australia and Suburb E, South Australia solely in the name of Mr Meade.
It is not a matter of dispute that the relevant transactions occurred as follows:
(a)Ms B Donati provided funds in the sum of $470,256 to the Wife and/or Mr Meade so that Mr Meade could purchase a property situated at B Street, Suburb C, South Australia (‘the Suburb C property’), the settlement of which took place in early 2021; and
(b)Ms B Donati provided funds in the sum of $400,550 to the Wife and/or Mr Meade to facilitate the purchase by Mr Meade of a property at D Street, Suburb E, South Australia (‘the Suburb E property’), the settlement of which took place in late 2020.
Both purchases were completed after the separation of the Husband and the Wife.
Mr Meade is the sole registered proprietor of each of the Suburb C and Suburb E properties, the titles to which are unencumbered by mortgage.
With respect to the Suburb E property, the Wife asserts the purchase was effected by way of contributions from Mr Meade of the deposit of $15,000 and an additional sum of $118,268, and that the balance of the purchase price was initially borrowed by him from his grandmother and subsequently repaid by way of a payment from Ms Donati to Mr Meade’s mother (in her capacity as Attorney for his grandmother) in the sum of $400,550 in late 2020.
Documents relied upon by the Husband and annexed to his Statement of Claim suggest that Mr Meade and the Wife reside together at the Suburb E property. The Wife asserts that her current home is the Suburb C property. It is not necessary for the purpose of the present application to determine which is accurate.
In a letter from her solicitors to the Husband’s solicitors dated 16 September 2022, the Wife confirmed that the funds had been provided by her mother to Mr Meade for the purchase of the Suburb C and Suburb E properties and conceded that she held an equitable interest as to 50% of each of those properties and that such interests would form part of the asset pool available for distribution between the Husband and the Wife. Although the concession was expressed to be for the purposes of mediation, no objection was taken to the Husband’s reliance upon it. For the purposes of the proceedings, the Wife concedes that she has an equitable interest in the Suburb C property but asserts that the extent of that interest is an issue to be determined at trial. She also asserts that the extent of her interest, if any, in the Suburb E property is an issue for determination at trial.
The Husband’s case, as outlined by way of written submissions but not articulated in his Statement of Claim or in any application before the Court, is that the Wife holds an equitable interest by way of constructive or resulting trust as to the whole of the value of the Suburb C property and by way of constructive trust 80% of the value of the Suburb E property, being equitable interests in the total sum of $1,120,000 based on current valuations of those properties. The Husband challenges any suggestion that any part of the funds applied to the purchase of these properties should be considered a gift made directly to Mr Meade, noting the short period of time that had passed between the parties’ separation and the transactions in question.
The Husband alleges that the Wife ‘asserted her control’ and ‘caused’ Mr Meade and Ms Donati to apply the funds to the purchases of the Suburb C and Suburb E properties in Mr Meade’s name. The basis for the allegation of control is unclear.
The Husband also alleges that the Wife and Mr Meade ‘colluded’ to have the properties registered in Mr Meade’s name to avoid the Husband from ‘claiming his share of these matrimonial funds’ and to prevent the properties from being taken into account as part of the spouse parties’ settlement; and that the Wife is ‘attempting to exclude these assets from the joint pool of assets in the proceedings.’
The Wife denies that either of the Suburb C or Suburb E properties were acquired using funds gifted to the Husband and the Wife during their marriage. She asserts that they are assets which were acquired post-separation using funds gifted by her mother at or after the time of the purchases, being funds to which the Husband made no contribution.
As submitted on behalf of the Wife, the Husband’s position that the funds used to purchase those properties were ‘matrimonial funds’ appears to be based on an argument that the Husband and the Wife were supposed to receive, but did not in fact receive, the sum of $1,000,000 from the proceeds of sale of the F Street, Suburb G property. The Husband appears to assert both that the Wife was entitled to payment of 50% of the proceeds of sale of that property because she was one of two registered proprietors of the property and that the sum of $1,000,000 was owed to the Wife (and indirectly to the Husband) by way of gift from Ms B Donati on the basis that each of the adult children of Ms B Donati and their partners were given such a gift. Each of these somewhat contradictory positions is considered later in these reasons.
The Wife points to a number of difficulties with the proposition that the Husband and Wife were entitled to receive such funds, including but not limited to the discretionary nature of the trust by which the Suburb G property was held; the inability of the Wife, as a joint trustee, to exercise that discretion solely; the fact that the funds were distributed to J Pty Ltd, being a company that was controlled by Ms B Donati; the absence of any resolution made by J Pty Ltd to gift or otherwise pay the sum of $1,000,000 to the Wife, and the lack of contribution made by the Husband or the Wife to the acquisition of the Suburb G property. I accept that the evidence does not demonstrate that either the Husband or the Wife held any legal entitlement to such funds at any material time.
It would appear that the Husband’s case is based on an assertion or belief that the Husband and the Wife had been either promised or notionally allocated a gift in the sum of $1,000,000 during their marriage, but that the funds were instead directed to J Pty Ltd Pty Ltd, or at least not paid to the Wife, in order to keep them from the Husband’s reach. The Husband’s assertion with respect to the purported gift of $1,000,000 made by Ms B Donati to the Wife prior to the separation of the Husband and the Wife will be considered in greater detail later in these reasons.
In my view, it matters little for the purpose of determination of the property entitlements as between the Husband and the Wife whether the funds in question were provided by Ms B Donati shortly before the Husband and Wife separated and ‘set aside’ by the Wife as alleged by the Husband or were in fact provided to the Wife and/or Mr Meade shortly after the Husband and the Wife separated as asserted by the Wife and each of the proposed additional Respondents. Irrespective of the timing of the provision of the funds, the Wife acknowledges that the funds were provided to Mr Meade by her mother and applied as alleged and she concedes that she holds an equitable interest in at least one of the relevant properties. Such interests held by her as are conceded by her or demonstrated on the evidence adduced at trial will form part of the Court’s identification of the existing legal and equitable interests of the Husband and the Wife in property, which will be the starting point for the Court’s consideration of their competing applications pursuant to section 79 of the Act.[20]
[20] Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108 at [37].
All of the property interests of the Husband and the Wife, however acquired, will be taken into account by the Court, irrespective of whether they were acquired following separation or during the marriage.[21] Any equitable interest held by the Wife in the Suburb C and Suburb E properties will not be quarantined or excluded from the Court’s consideration merely on the basis that it was not acquired until after the Husband and the Wife separated (if such a finding is ultimately made).[22]
[21] Carter & Carter [1981] FamCA 18; (1981) FLC ¶91-061; Aroney & Aroney [1979] FamCA 62; (1979) FLC ¶90-709; Bonnici & Bonnici [1991] FamCA 86; (1992) FLC ¶92-272; Napthali & Napthali [1988] FamCA 9; (1989) FLC ¶92-021.
[22] Singerson & Joans [2014] FamCAFC 238; Jabour & Jabour [2019] FamCAFC 78; (2019) FLC ¶93–898.
Although it is common in proceedings under section 79 of the Act to have regard to the fact that assets were acquired by one party or the other following their separation, the real significance of such a circumstance is not derived from there being a legally recognised category of ‘matrimonial funds’ as contended for by the Husband, but rather from the fact that assets acquired by one of the parties following separation using funds that were not available at the time of separation are commonly assets to which the other party cannot be said to have made any direct or indirect contribution.
In the present matter, irrespective of the precise timing of the provision of the funds by Ms B Donati, the funds in question are funds to which the Husband cannot be said to have made any contribution. In the absence of evidence of any intention on the part of Ms B Donati to benefit the Husband as well as the Wife by provision of the funds in question, those funds, to the extent that they are now represented by equitable interests held by the Wife, will be considered to have been a contribution made on behalf of the Wife.[23]
[23] Kessey & Kessey [1994] FamCA 162; (1994) FLC ¶92-495.
In circumstances where, on the Husband’s own case, Ms Donati actively endeavoured to keep the funds from the Husband’s reach and avoid conferring any benefit on him, and in circumstances in which it would appear not to be a matter of dispute the funds were not in fact provided by Ms Donati until after the parties had separated and were indeed provided directly to or for the use of the Wife’s current partner, a conclusion that they were intended by Ms B Donati to benefit the Husband as well as the Wife would not appear to be open, irrespective of whether Ms B Donati formed the intention to provide the gift prior to the parties’ separation.
Although that is ultimately an issue to be determined at trial, it is of significance to the present application because it is relevant to the question of whether the Husband’s (legitimate) desire to ensure that any equitable interest held by the Wife in the Suburb C and Suburb E properties necessitates affecting Mr Meade’s rights with respect to those properties.
The Wife and Mr Meade point to the fact that there is no final relief sought by the Husband with respect to either of the properties registered in Mr Meade’s name. During the course of oral submissions, Counsel for the Husband foreshadowed that relief would be sought in the form of a declaration pursuant to section 78 of the Act as to the Wife’s equitable interest in those properties and a default sale clause in the event that the Wife is required to make a payment to the Husband. No such relief has in fact been sought. This would appear, at first blush, to fall foul of the principles outlined by the Full Court in B Pty Ltd and Ors & K and Anor, as outlined earlier in these reasons.
As Counsel for the Husband properly conceded, taking into account any equitable interest held by the Wife in the Suburb C and Suburb E properties would not necessitate interfering with Mr Meade’s legal ownership of those properties. A declaration pursuant to section 78 could be made as between the Husband and the Wife without Mr Meade’s participation, which would not be binding on Mr Meade.[24] Whether the application of the funds provided by Ms B Donati is treated as a premature distribution to the Wife[25] or any equitable interest held by the Wife in the properties in question is merely included as part of the Court’s consideration of the parties’ legal and equitable interests in property, it would appear on the evidence before the Court that the Husband’s entitlement to a just and equitable distribution of property can readily be satisfied without recourse to intrusion on Mr Meade’s rights.
[24] Lanceley & Lanceley [1994] FamCA 94; (1994) FLC ¶92-491.
[25] As in Townsend & Townsend [1994] FamCA 144; (1995) FLC ¶92-569.
The Husband purported to seek by way of his Statement of Claim ‘an immediate order to set aside the transaction for the acquisition of the Suburb C and the Suburb E properties with the assets to be transferred into the names of the applicant and the respondent and to be taken into account for the division of assets.’ This proposed order, which is presumably sought pursuant to section 106B of the Act is, on its face, nonsensical. The Husband and Wife have not at any time been the legal owners of the Suburb C and Suburb E properties. Setting aside the acquisition of these properties would have the effect of restoring ownership to the respective vendors, not to the Husband or the Wife. The vendors (who have not been put on notice or sought to be joined) would be required to refund the funds used to purchase those properties. As submitted on behalf of Mr Meade, this would serve no utility with respect to the Husband’s case, as those funds would not be paid to the Husband or the Wife.
Furthermore, it is not apparent how it is that the Husband asserts that the transactions could be seen to defeat or be likely to defeat an existing or anticipated order having regard to the contributions issues discussed earlier in these reasons and the ability of the Court to have regard to the equitable interest held by the Wife in each of these properties (to the extent that such interest exists) in determining the entitlements of each of the Husband and the Wife.
It was submitted on behalf of Mr Meade that the Husband has not established a reasonable claim to an order altering the property interests held by him in the Suburb C or Suburb E properties pursuant to section 79 or 90AE of the Act or otherwise. I accept that submission.
The Husband has not demonstrated that any direct dealing with the properties held by Mr Meade would be (or would be likely to be) required in order for him to achieve a just and equitable distribution of the property of the parties to the marriage, and even taking the Husband’s case at its highest, it is difficult to see how what would otherwise have been the Husband’s entitlements could be expected to change significantly as a result of the gift from Ms B Donati in light of the fact that such interests were, even on the Husband’s best case, contributed very late in the parties’ marriage by or on behalf of the Wife.
This is all the more so in circumstances in which the evidence reveals that there were other significant financial contributions made on behalf of the Wife during the parties’ relationship, which are conceded by the Husband to have been over $320,000.[26] As such, this would appear to fall within the category of cases recognised in the authorities as outlined earlier in these reasons where joinder of the legal owner of the property in question is not required on the basis that the claim of the applicant for joinder can be satisfied without recourse to property held by the third party. The Husband has not demonstrated otherwise.
[26] Wife’s affidavit filed 24 June 2021 paragraphs [13]-[15]; Husband’s affidavit filed 5 November 2021 paragraphs [4]-[6].
Counsel for the Husband submitted that if a payment was ordered to be made by the Wife to the Husband and that order was not complied with, sale of the relevant properties might need to be considered. He submitted that the Court should try to finalise all matters between the parties on the original application. However, the proposition that the potential need to sell or otherwise deal with property held by a third party in the context of enforcement in the event of non-compliance with orders satisfies the test for joinder has been rejected in a number of authorities.[27]
[27] For example, Southwell & Jane [2011] FamCA 663; Toma & Doyle (No 2) [2023] FedCFamC1F 477; Helsinki & Bassett [2022] FCWA 275.
The Husband further submitted that Mr Meade’s joinder is necessitated by the need for valuations of the Suburb C and Suburb E properties, which require his cooperation as the sole registered proprietor. Mr Meade, through his legal representative, advised the Court of his consent to valuations of those properties being undertaken for the purpose of these proceedings. In light of that consent, and in the absence of any evidence of its retraction, the need for Mr Meade’s involvement does not render his participation as a party necessary.
The Husband complains that the Wife has not produced documents demonstrating Mr Meade’s financial circumstances, particularly documents pertaining to his property settlement with his former wife, which is said to have been finalised in April 2020. However, as outlined in the authorities discussed earlier in these reasons, joinder is unlikely to be ‘necessary’ in the relevant sense where there are other means of obtaining what is needed, such as subpoenas, and the fact that disclosure may be more efficiently obtained does not of itself provide an appropriate basis for joinder.
The Husband also complains that in April 2020, the Wife withdrew from an account held jointly by the spouse parties funds in the sum of which $70,000, being part of a deposit of $120,000 received from entities controlled by Ms Donati prior to the spouse parties’ separation, and that she deposited the sum of $50,000 of those funds into an account held jointly by the Wife and Mr Meade. The link sought to be drawn between this alleged transaction and the necessity of joinder of Mr Meade is unclear, but if this assertion is proven by the Husband, the discussion earlier in these reasons pertaining to the ability to deal with such a transaction, such as by way of treatment as a premature distribution to the Wife, applies equally to this issue.
Counsel for the Husband described Mr Meade as ‘a financially interwoven person with the Wife’ and submitted that this weighed in favour of joinder. In this respect, the Husband’s application bears similarities to the unsuccessful application in Wayne & Dillon, which was based on an assertion of a financial interrelationship between the spouse party and the proposed respondent.
I accept the submission made on behalf of Mr Meade that the Husband’s Statement of Claim does not properly disclose or adequately plead a cause of action against him and does not set out with clarity the material facts required to identify such a cause of action. Mr Meade otherwise makes a number of objections to the Husband’s Statement of Claim. Whilst many of these objections would appear at first glance to have merit, in light of what I consider to be the more fundamental difficulties with the Husband’s case with respect to Mr Meade, it is not necessary to determine those objections.
THE PROPOSED THIRD RESPONDENT
With respect to Ms B Donati, the Husband relies on an assertion that Ms B Donati and the Wife hold interests in nine companies and trusts, being what is collectively described as ‘the B Donati Family Group.’ Insofar as the Wife is concerned, the independent documentary evidence relied upon by the Husband reveals that:
(a)the Wife and Ms B Donati are equal shareholders in H Pty Ltd, which is the trustee of a discretionary trust known as the H Property Trust, of which both the Wife and Ms B Donati are appointors. Ms B Donati is the sole director of H Pty Ltd;
(b)the Wife and Ms B Donati are equal shareholders in K Pty Ltd Pty Ltd, which is the trustee of a discretionary trust known as the K Pty Ltd Trust, of which both the Wife and Ms B Donati are appointors. Ms B Donati is the sole director of K Pty Ltd Pty Ltd;
(c)the Wife and Ms B Donati are joint trustees of a discretionary trust known as the L Trust, of which Ms B Donati is the sole appointor; and
(d)the Wife and Ms B Donati are joint trustees of a discretionary trust known as the M Family Trust, of which Ms B Donati is the sole appointor.
The Husband also asserts that the Wife is ‘a beneficiary and trustee of the B Donati Family Group Trust,’ but has not adduced any evidence to support that assertion or to demonstrate the existence of a trust by that name.
The Husband alleges that the Wife ‘demonstrates a complete level of control in all aspects over the B Donati Family Group of Trusts where she is involved in the purchase and sale of various trust assets, control of trust funds held in the various trust bank accounts, control of financial resources such as revenue generated from the lease of trust property and the distribution of funds provided from the various trusts to purchase property in the name of [Ms B Donati]’ and that the Wife, ‘where she is not named as an office holder of the B Donati Family Group, assumes the role in her capacity as a de facto director or trustee.’
It was submitted on behalf of Ms Donati that this assertion amounts to no more than a sweeping generalisation in relation to which no particulars have been pleaded, and that it is of significance that the Husband does not plead any legal or equitable claim with respect to the B Donati Family Group. I accept that submission.
The Wife’s evidence[28] is that:
(a)Upon the death of her father in 2013, she was appointed as a joint trustee of the Suburb Q Property Trust and the M Family Trust, together with Ms B Donati;
(b)She is an equal shareholder with Ms B Donati in H Pty Ltd and K Pty Ltd, which are corporate trustees of the H Property Trust and the K Pty Ltd Trust respectively;
(c)She holds no beneficial interests in the aforementioned trusts;
(d)The H Property Trust holds a property at N(1) Street, Suburb O and the Wife made no contribution towards the purchase of that property; and
(e)The K Pty Ltd Trust holds a property at N(2) Street, Suburb O and the Wife did not make any contribution towards the purchase of that property.
[28] Wife’s affidavit filed 24 June 2021, paragraphs [26]-[30].
None of the evidence or documents produced by the Husband contradict that evidence.
It is well established that without more, the interest of a beneficiary of a discretionary trust is not ‘property’ within the definition in section 4 of the Act, for the purpose of proceedings under section 79.[29] The question of whether a party will be considered to have a proprietary interest in the property of a trust is a question to be determined having regard to the individual facts and circumstances of each case.[30] The central question to be determined by the Court with respect to this issue is whether the party in question can be said to be in effective control of the trust such that they have the power to distribute the trust property to themselves or to the other party to the marriage. Consideration of whether the party holds the power of appointment is an important consideration in determining whether that party is in control of a discretionary trust,[31] and the history of distributions made by the trust will be a relevant consideration.
[29] Stacy & Stacy [1977] FamCA 104; (1977) FLC ¶90-324.
[30] Goodwin & Goodwin Alpe [1990] FamCA 147; (1991) FLC ¶92-192; Kennon & Spry [2008] HCA 56; (2008) 238 CLR 366.
[31] Kennon & Spry [2008] HCA 56; (2008) 238 CLR 366; Ashton & Ashton [1986] FamCA 20; (1986) FLC ¶91-777, Davidson & Davidson [1990] FamCA 187; (1991) FLC ¶92-197.
As a general proposition, where a party does not have control of a discretionary trust in accordance with the terms of the trust deed, or where control is shared with third parties, a party will not be considered to be in effective control of the trust, unless it can be established that the trust is a sham or is the puppet or alter ego of the party.[32] There are also circumstances in which a party may be taken to hold a beneficial interest in property that is otherwise owned by a trust, such as by operation of a resulting trust where a party has made contributions to the trust property.
[32] Ascot Investments Pty Ltd & Harper [1981] HCA 1; (1981) 148 CLR 337; Gould & Gould & Swire Investments [1993] FamCA 126; (1993) FLC ¶92-434.
The Husband alleges that the Wife’s role with respect to the companies and trusts of the B Donati Family Group is significant as she has ‘had control in the purchase and sale of trust property/assets, authority to distribute trust funds and the generation of trust revenue by negotiation and management of rental leases for future trust revenue.’
In support of this assertion, the Husband points to dealings by the Wife with respect to a commercial property at P Street, Suburb Q (‘the Suburb Q property’), which is owned by the Wife and Ms B Donati in their capacity as trustees of either the Suburb Q Property Trust or the M Property Trust (in either case, being a discretionary trust of which Ms B Donati is the sole appointor), including email correspondence in which she referred to herself as ‘the owner’ of that property and made arrangements for the payment of rental income with respect to the property.
Noting that the Wife is one of two registered proprietors of that property in her capacity as one of two trustees, it is unclear how this email correspondence is said by the Husband to advance his position with respect to joinder. If it is intended by the Husband that the Court draw an inference that the Wife and/or Ms B Donati consider that the Wife is the beneficial owner of the property, I do not accept that such an inference is open.
With respect to the Suburb Q property, the Husband also:
(a)Relies upon lease agreements in which the Wife and Ms B Donati are named as lessors and which he asserts generates trust income ‘for the Wife and Ms Donati’ in the sum of $299,008 plus GST per annum and $237,090 plus GST per annum respectively. This assertion overlooks the fact that the Wife and Ms B Donati hold their interests in the Suburb Q property as trustees of a discretionary trust. The assertion that the rental income generated by the property is for the Wife and Ms B Donati, as distinct to being income of the trust, is not supported by evidence.
(b)Asserts that during the spouse parties’ marriage, the Wife made arrangements for herself and Ms B Donati to obtain finance and insurance for the Suburb Q property.
(c)Relies upon a loan-to-value ratio spreadsheet used by Bank R in 2013 with respect to borrowings related to the Suburb Q property and other trust properties which includes the former matrimonial home.
(d)Relies upon an insurance quotation prepared by S Company with respect to the Suburb Q property dated mid-2023, which is expressed to have been prepared for the Husband, the Wife, and both of the Wife’s parents, and those persons are named as the insured. The associated email correspondence demonstrates that the insurance broker was provided with those names by a Mr T of T Company and not by the Wife or Ms B Donati. This document was prepared approximately 10 years after the death of the Wife’s father.
In my view, these matters demonstrate no more than that the Wife administers the assets of the trust which owns the Suburb Q property in her capacity as trustee of that trust. It does not establish that the property of that trust is or is treated as being beneficially owned by the Wife.
The Wife and Ms B Donati assert (consistently with the evidence of the Wife) that the Wife took on the role of trustee of the Suburb Q Property Trust and the M Family Trust upon the death of her father in 2013, and that neither the Husband nor the Wife has made any contribution towards the Suburb Q property. At least insofar as the Wife is concerned, these assertions were contained in the letter from her solicitors to the Husband’s solicitors dated 16 September 2022, which is relied upon by the Husband. No evidence to the contrary has been adduced by the Husband.
In any event, no relief is sought by the Husband with respect to the Suburb Q property.
As submitted by Senior Counsel for the Wife, in order to succeed with his application for joinder insofar as it relates to any of the trusts in which the Wife and Ms B Donati hold interests, the Husband would need to demonstrate that the Wife has some element of control over the trusts beyond her role as a joint trustee with Ms B Donati which would effectively enable her to use the trust property as if it were her own. The evidence relied upon by the Husband does not rise to this level.
The Wife submits that there is no trust and no corporate trustee over which she can exercise sole control. That is consistent with the documentary evidence before the Court, including that relied upon by the Husband. Counsel for the Husband conceded that there is no single trust entity over which the Wife had unfettered power, but submitted that ‘the fettering, that is, the joint position is what would lead the Court to make that joinder an appropriate exercise of power.’ This submission overlooks the fact that before the Court can be persuaded that it is appropriate to join a third party to the proceedings, the Husband must demonstrate that the there is a basis for the joinder having regard to the factors in rule 3.01. The absence of effective control by the Wife over any of the trusts in question is a factor which, on its face, weighs against the Husband’s joinder application.
The Wife further emphasises that each of the trusts is discretionary and she has no defined interest in the property of any of them. There is no evidence to suggest that either of the Husband or the Wife have ever received distributions from any of the Suburb Q Property Trust, the M trust, the K Property Trust or the H Property Trust.
Senior Counsel for the Wife further submitted that even if an argument that the Wife had some beneficial interest in the trust property were made out, in the absence of any specific relief sought against Ms B Donati with respect to that property, such an argument does not provide a basis for joinder. I accept that submission, having regard in particular to the authorities already referred to, which confirm that joinder is not necessary in order to enable a party’s equitable interest in property to be taken into account where no specific relief is sought with respect to the property in question.
The Husband relies on conveyancing documents which he says demonstrate that in late 2019, during the course of the spouse parties’ marriage, a commercial property at F Street, Suburb G, South Australia (‘the Suburb G property’) was sold by the Wife and Ms B Donati as joint vendors and transferors for the sum of $3,500,000. The documents in fact demonstrate that a 50% interest in that property was transferred by the Wife and Ms B Donati pursuant to the Trustee Act 1936 (SA) to U Pty Ltd, being the registered proprietor of the remaining 50% interest. The consideration for the transfer was $3,000,000. The Husband seeks to join Ms Donati as a party to the proceedings in part ‘to include this property and claim the [Wife’s] half share of the proceeds from the sale of this property in the matrimonial pool of assets.’
The Husband asserts that the Suburb G property was held by the Wife and Ms B Donati as trustees of the Suburb Q Property Trust. The Wife and Ms B Donati assert that it was held by the M Family Trust. In my view, the distinction matters little for present purposes. On either party’s case, the Suburb G property was registered in the names of the Wife and Ms B Donati in their capacity as joint trustees of a discretionary trust of which Ms B Donati was the sole appointor. The Husband has adduced no evidence to suggest that either he or the Wife made any contributions towards that property or had any beneficial entitlement to a share in the proceeds of sale.
The Husband alleges that the Wife ‘took over day to day management of the trust assets from her appointment as Trustee.’ Irrespective of which trust in fact owned the Suburb G property, this assertion, if proven, goes no further than to establish that the Wife acted consistently with her role as trustee. It does not establish a beneficial interest held by the Wife in the trust property, that the Wife had effective control over the trust such that she was able to treat its assets as her own, or that the trust was a sham or the Wife’s puppet or alter ego.
It was submitted on behalf of Ms B Donati that the Husband has filed no pleading or particulars to demonstrate a basis upon which the Wife, in her capacity as a joint trustee, is or was at any time entitled at law or equity to a half share of the proceeds of sale of the Suburb G property or indeed any distribution, and that there is therefore no basis for the Husband to ‘claim the [Wife’s] half share of the proceeds…’. I accept that submission.
The Husband initially alleged, by way of his Statement of Claim, that the proceeds of sale of the Suburb G property had been used by trusts controlled by the Wife and Ms B Donati to purchase properties at N(1) and (2) Street, Suburb O (‘the Suburb O properties’) in the total sum of $1,400,000. In this regard, he relied upon conveyancing records demonstrating that N(2) Street was purchased by K Pty Ltd for $1,000,000 in early-2020 and N(1) Street by H Pty Ltd for $400,000 in mid-2020. The Husband seeks to join Ms Donati to the proceedings ‘to include and claim the [Wife]’s half share of these properties in the matrimonial pool of assets.’ Counsel for the Husband submitted that the property of the K Pty Ltd Trust and the H Property Trust form assets of the relationship because there is ‘a level of control over those which would indicate that those properties held by the trusts should be included.’
The Husband subsequently appears to have accepted the assertion made by the Wife and Ms Donati that the proceeds of sale of the Suburb G property were distributed in 2019 to J Pty Ltd, being a company controlled solely by Ms B Donati, and that none of the proceeds of sale were distributed to the Husband, the Wife, or any entities controlled by them. No evidence adduced by the Husband (who bears the onus) would support a finding or inference to the contrary. It is unclear whether the Husband’s apparent acceptance of the fact of the distribution to J Pty Ltd constitutes an abandonment of his assertion that the proceeds of sale of the Suburb G property were applied to the acquisition of the Suburb O properties.
To the extent, if any, that the Husband continues to assert that the funds used to purchase the Suburb O properties were or were derived from the proceeds of sale of the Suburb G property, he has adduced no evidence to demonstrate this assertion. This appears to be mere speculation. If accurate, the Husband’s position would amount to double counting those funds, in that it would appear that he seeks to have both the proceeds of sale and the properties he asserts were purchased with those proceeds made available for distribution between the spouse parties.
Ms Donati asserts that the Suburb O properties comprise her current residence and childhood home and adjacent paddocks. She is said to have inherited a 1/7 interest in these lots from her parents and purchased the other 6/7 shares from her siblings, and subsequently placed the properties into the trusts by which they are presently held. She further asserts that neither the Husband nor the Wife has made any financial or other contribution to the Suburb O properties or received any distribution from the trusts by which they are held. The Wife supports these assertions made by Ms Donati. Whilst there is no evidence before the Court from Ms Donati, there is nothing in the evidence adduced by the Husband (who bears the onus) or in his Statement of Claim which would suggest even a possibility that these properties were acquired or contributed to by the Husband or the Wife.
Aside from the bare assertion made by the Husband that there is a ‘level of control’ by the Wife over the trusts which own the Suburb O properties, which assertion is unsupported by evidence, there is nothing before the Court with respect to these properties which would justify the joinder of Ms B Donati. In any event, as Ms B Donati and the Wife point out, the Husband has not sought to join and has not sought orders against the corporate trustees which are the registered proprietors of the Suburb O properties. He has also failed to particularise any claim he makes with respect to those properties.
As outlined earlier in these reasons, the Husband initially claimed that prior to the spouse parties’ separation, Ms B Donati gifted each of her children (including the Wife) and their respective partners the sum of $1,000,000; that the Wife retained those funds and that she told the Husband following their separation ‘you are not getting any of these funds.’
He now makes the slightly different assertion that shortly after the sale of the Suburb G property and the distribution of the sale proceeds to J Pty Ltd, the sum of $1,000,000 was distributed by that company to each of the Wife’s siblings and their respective partners; that the intention ‘was always’ to divide the sale proceeds between the Wife and her siblings, and that the funds ultimately advanced by Ms B Donati to Mr Meade for the purchase of the Suburb C and Suburb E properties effectively represent the Wife’s share, or part of the Wife’s share, of those proceeds. That is, it appears that the Husband no longer asserts that the funds were received by the Wife prior to separation, but that the intention to provide the funds to the Wife was formed prior to separation but the gift was not in fact made until after separation.
This position taken on behalf of the Husband is difficult to reconcile with his position with respect to what he asserts was the Wife’s ‘half share’ of the proceeds of sale of the Suburb G property.
The Wife disputes the Husband’s assertion that the sum of $1,000,000 was advanced to each of her siblings through J Pty Ltd from the proceeds of sale of the Suburb G property. She does not deny that financial support was provided by her parents to her siblings and that they each received approximately $1,000,000, but asserts that this was not in the form of a lump sum payment from the proceeds of sale of the Suburb G property, but rather in the form of smaller payments over time, none of which were derived from the proceeds of sale of that property. The Husband has adduced no evidence to support his assertions in this regard. They would appear to be speculative.
The Husband asserts that the case presented by him will be that the basis for the transactions as alleged by him was to ‘disguise’ what was in reality a pre-separation gift to the Wife and put it ‘beyond the purview’ of the Husband, and that the Wife has taken steps, by registering property equitably owned by her in the name of another, to disguise the true nature of her property holdings. He argues that the gift from Ms B Donati should be treated as having been made prior to the separation of the Husband and the Wife, at the time of the sale of the Suburb G property, at which time he says (but has not adduced evidence to demonstrate that) the gifts were made to the Wife’s siblings.
The Husband alleges that there was collusion between the Wife and each of the proposed Respondents to create the impression that this asserted pre-separation gift was not in fact made until after separation, but in reality, the funds were ‘held onto’, ‘not passed over,’ or effectively held on trust for the Wife until after the parties’ separation. As Counsel for the Husband put it in oral submissions, his case is that the funds were ‘transferred out of the control of the Wife.’ It follows from this, the Husband argues, that the funds provided to Mr Meade for the purpose of the purchase of the Suburb C and Suburb E properties should be treated as having come from the Wife and not from Ms B Donati.
The Husband relies on the aforementioned letter to his solicitors from the Wife’s solicitors dated 16 September 2022, which acknowledges that the payments made by Ms B Donati with respect to the Suburb C and Suburb E properties were intended to put the Wife on equal footing with her siblings who, together with their partners, had each received gifts of approximately $1,000,000. That assertion will undoubtedly be relevant to the Court’s determination of the extent of the Wife’s equitable interest those properties.
The Husband asserts that the letter indicates that the funds were paid to enable ‘the [Wife] to be on equal footing with her siblings and respective partners which at the time included the [Husband] as the husband of the [Respondent].’ The letter in fact refers to the gift having been provided to the Wife and Mr Meade (and having been paid to Mr Meade), and not to the Wife and the Husband. I do not accept that any intention on Ms Donati’s part to benefit the Husband in his capacity as the Wife’s spouse or any concession that any funds were paid to the Wife (and indirectly to the Husband) prior to the spouse parties’ separation can be inferred from the contents of the letter. Indeed, the overt actions of Ms Donati in paying the funds to Mr Meade suggest precisely the opposite intention.
The Wife asserts that the Husband benefited from gifts received from Ms B Donati during his marriage to the Wife,[33] and Mr Meade has likewise benefitted during his relationship with her. She submits that the fact that some financial gifts were made during the parties’ marriage and some after, suggests that it was the intention of Ms B Donati (and her late husband) to support their children (and indirectly their spouses at any given time), not their sons-in-law and daughter-in-law directly.
[33] A matter which is not in contention between the parties.
I refer to and repeat the observations made earlier in these reasons with respect to the relevance of the question of whether this gift was received by the Wife shortly prior to or after the spouse parties’ separation.
Counsel for the Husband indicated during the course of oral submissions an intention to seek that the distribution of the proceeds of sale of the Suburb G property to J Pty Ltd be set aside pursuant to section 106B of the Act. This was the first time such an application had been foreshadowed, save for a vague and unparticularised reference to a potential future claim outlined in the Statement of Claim. The failure of the Husband to particularise his claim is, again, a significant flaw in his application with respect to joinder.
In the event of an application under section 106B, the precise identity of the trust which was the owner of the Suburb G property prior to its sale would take on significance for a number of reasons, not least of which is the fact that the Wife and Ms B Donati assert that the trust in question was wound up following the sale of the property.
It is, however, difficult to see how the elements of section 106B could be made out, even taking the Husband’s case at its highest. The transaction in question was a distribution made by a discretionary trust of which the Wife was one of two trustees and was not an appointor. The evidence before the Court does not establish that the Wife had effective control of the relevant trust such as to enable a finding that the trust property was or was able to be treated as the property of the Wife or that it was ever within her control other than in accordance with her role as one of two trustees of a discretionary trust. As Counsel for the Husband conceded during oral submissions, there is no evidence to suggest that the Wife had the power, pursuant to the relevant trust deed and having regard to her fiduciary obligations as trustee, to distribute trust property to herself or to the Husband or otherwise to bring them into the pool of assets available for distribution between the parties.
Indeed, the Husband’s reference to the Wife’s ‘half share’ of the proceeds of sale of the Suburb G property belies the difficulty with his case in this regard. The Husband effectively seeks to have the Court disregard the existence of the trust by which the property was held and to treat the beneficial ownership as being indistinguishable from the legal ownership, but he has adduced no evidence to demonstrate that the legal ownership did in fact reflect the beneficial ownership notwithstanding the undisputed existence of the trust.
Furthermore, the distribution in question was of property to which neither the Husband nor the Wife claim to have made any contribution. There is no evidence to suggest the distribution was made improperly or other than in accordance with the terms of the trust deed.
Moreover, at the time of the distribution, the Husband and Wife had not separated and there were no proceedings on foot between them. It is difficult to see how the Husband could establish on the evidence before the Court that there was an anticipated order reasonably expected at the time of the transfer, which was likely to be defeated by the transfer.[34]
[34] See Pflugradt & Pflugradt [1981] FamCA 23; (1981) FLC ¶91-052; Gelley & Gelley (No 2) [1992] FamCA 84; (1992) FLC ¶92-291; Heath & Heath & Westpac Banking Corporation (No 2) [1984] FamCA 17; (1984) FLC ¶91-517.
As the Wife submits, J Pty Ltd is not a party or a proposed Respondent and no relief has been sought by the Husband against it. There is also no relief sought against the Wife’s siblings, each of whom, on the Husband’s case, subsequently received a distribution of these proceeds in the order of $1,000,000 from J Pty Ltd. Furthermore, this aspect of the Husband’s case involves an element double counting, as he asserts that the funds used to purchase the Suburb C and Suburb E properties were derived from the proceeds of sale of the Suburb G property but seeks to include both the proceeds of sale and those properties in the list of assets available for distribution between the spouse parties.
The Husband describes his ‘best position’ as being a finding that the sum utilised to purchase the Suburb C and Suburb E properties was a trust distribution made to the Wife at the time of the sale of the Suburb G property but was disguised and withheld by the Wife, with the complicity of Ms Donati, to prevent it from being recognised as an asset of the parties in circumstances in which the Wife had already formed her intention to leave the marriage; and that Mr Meade became complicit when he agreed to register the Suburb C and Suburb E properties in his name and hold them on trust for the Wife. The characterisation of this alleged transaction as a trust distribution departs from characterisation of the same transaction by the Husband as a gift from Ms B Donati. This highlights what appears to be some confusion in the Husband’s case as to the distinction between funds and assets held by individuals and those held by entities in which those individuals hold interests.
The Husband argues that in order for him to promote his best case, ‘it would be necessary to join the proposed parties about the nature and extent of any collusion, to put on them an obligation of disclosure in respect of relevant transactions and to provide for an obligation to provided evidence rather than the rebuttable inference that would arise were they not joined and were evidence not called from each of them.’ This is part of a broader assertion made by the Husband that ‘the matrimonial asset pool cannot be determined unless both the first and second third parties are joined to these proceedings.’
It was submitted on behalf of Ms Donati that a finding of the nature sought by the Husband would not affect her interests or render her participation as a party necessary, noting that no substantive relief is sought against her on a final basis.
In any event, a major difficulty with the Husband’s position is that any distribution to the Wife of any part of the sale proceeds of the Suburb G property was at the discretion of the Wife and Ms B Donati as trustees of the discretionary trust which owned the property. If the Wife and Ms B Donati declined to cause the trust to make a distribution to the Wife in 2019 when the property was sold, then irrespective of the reasons for that decision, the consequence is that at that time, the Wife (and the Husband) had no entitlement to any such funds, whether a different decision would have been taken if the parties’ separation had not been imminent or not.
If, as alleged by the Husband, Ms Donati intended to orchestrate a circumstance whereby the Husband would not benefit from the gift (or distribution) of part of the proceeds of sale of the Suburb G property, this is inconsistent with his suggestion that the gift was made during the marriage for the benefit of the Husband and the Wife. If Ms B Donati (together with the Wife) elected not to cause the trust which owned the property to distribute the funds in question to the Wife in circumstances in which the Wife’s marriage was failing, then there simply was no pre-separation gift or distribution of those funds to the Wife. Furthermore, as already stated, the timing of the distribution or payment to the Wife is likely to be of limited significance with respect to its impact on the Husband’s ultimate entitlements.
It was submitted on behalf of the Wife that the Husband’s argument with respect to the purported gift (or distribution) of $1,000,000 rises no higher than a hope held by him that he and the Wife would receive a payment from the sale proceeds of the Suburb G property (in circumstances in which they had no legal or equitable entitlement to insist on receiving one), together with a grievance arising from the fact that Ms B Donati did not in fact provide (or cause one of the relevant entities to provide) those funds to the Husband and the Wife prior to separation and instead provided financial assistance to Mr Meade and the Wife following separation. I accept that submission.
To the extent that the Husband’s application to join the proposed additional Respondents relates to a desire to obtain disclosure and evidence from them, as already discussed, such a desire does not render joinder necessary, noting that ‘necessary’ means more than simply ‘useful’ or ‘expeditious’.
The Husband makes various other assertions which, if proven, would appear to demonstrate that there is a financial relationship between the Wife and Ms B Donati. However, these matters do not demonstrate that Ms B Donati’s participation in the proceedings is necessary or that her rights might be directly affected by an issue in the proceedings. These include but are not limited to:
(a)a complaint that the Wife has not provided disclosure with respect to benefits she receives in the form of the use of motor vehicles owned by Ms Donati or by entities controlled by her;
(b)an assertion that expenses associated with those vehicles are paid for by the Wife, communications demonstrating that the Wife has authority to deal with funds in an account in the name of Donati Properties to pay for works with respect to the Suburb C property;
(c)an assertion that there have been regular (unspecified) payments of funds from (unspecified) trusts into a joint bank account held by the Wife and Ms B Donati; and
(d)an assertion that the Wife has, at some unspecified time, received the sum of $120,000 from the B Donati Trust, which funds were paid into the Olindo Trust, following which at another unspecified time, the Wife withdrew $70,000 and deposited into a fund held with Ms Donati.
The Husband also complains that the Wife has not provided disclosure with respect to income referred to as ‘share of net income from trusts’ in the Husband’s own Notices of Assessment for the financial years ending 30 June 2017 and 30 June 2019. He presumably invites the Court to infer that these represent distributions made by trusts controlled by Ms B Donati paid to him at the Wife’s request. He also points to payments received by the Wife from Ms B Donati and/or entities controlled by her.
These matters, together with the evidence already discussed with respect to the Wife’s interests in the various discretionary trusts controlled either by Ms B Donati and the Wife jointly, may well be relevant to an assessment of the financial resources of the Wife for the purposes of the assessment of the parties’ entitlements pursuant to section 79 of the Act.[35] They do not, however, individually or collectively, demonstrate an arguable case that the property of any of the trusts should be treated as property of the Wife, that orders should be made that directly affect Ms B Donati’s rights, or that her participation in the proceedings is necessary.
[35] Hall & Hall [2016] HCA 23; (2016) 257 CLR 490; Stacy & Stacy [1977] FamCA 104; (1977) FLC ¶90-324.
RELIEF SOUGHT BY THE HUSBAND
Significantly, no part of the Husband’s application for final orders seeks orders directed to either the proposed second or third Respondents. Aside from the section 106B applications with respect to the Suburb C and Suburb E properties discussed earlier in these reasons, no claim for final relief directed against either of the proposed additional Respondents is pleaded within the Husband’s Statement of Claim.
As mentioned above, the Husband’s case with respect to the properties registered in Mr Meade’s name is that the Wife has an equitable interest by way of constructive or resulting trust amounting to the whole of the value of the Suburb C property and by way of constructive trust as to 80% of the value of the Suburb E property. This claim was made for the first time by way of written submissions filed after the hearing and was not pleaded in the Husband’s Statement of Claim.
No cause of action against Ms B Donati has been articulated by the Husband, beyond a vague desire that ‘the various trust assets and financial resources of the various trusts … become part of the asset pool of the marriage and thus be distributed accordingly.’
In addition to leave to join the proposed additional Respondents, the Husband seeks by way of his Application in a Proceeding, in summary, interlocutory relief in the form of injunctions restraining the proposed additional respondents (together with the Wife) from:
(a)dealing with or disposing of the various assets of a group of trusts collectively described as the B Donati Family Group;
(b)dealing with or disposing of the two properties of which Mr Meade is the registered proprietor; and
(c)removing any property or substituting any party as to any position they hold in the B Donati Family Group including but not limited to substituting or removing any party as Director, Secretary, officeholder, beneficiary and trustee.
The proposed injunctions are vaguely drawn and do not differentiate between the two additional proposed respondents and do not differentiate between the various entities within the B Donati Family Group.
Ultimately, the Husband seeks that the following assets be included ‘as property of the matrimonial asset pool’:
(a)The Suburb C and Suburb E properties, which are registered in the name of Mr Meade;
(b)N(2) Street, Suburb O, which is registered in the name of K Pty Ltd in its capacity as trustee of the K Pty Ltd Trust;
(c)N(1) Street, Suburb O, which is registered in the name of H Pty Ltd in its capacity as trustee of the H Property Trust; and
(d)The Suburb Q property, which is registered in the names of the Wife and Ms B Donati in their capacity as trustees of the Suburb Q Property Trust; and
(e)The proceeds of sale of the Suburb G property.
As discussed earlier in these reasons, this involves a degree of double (and perhaps triple) counting, as the Husband asserts that the proceeds of sale of the Suburb G property were applied in part to the purchase of the Suburb C and Suburb E properties, and also that they were utilised for the acquisition of the Suburb O properties.
Furthermore, although the Husband’s case with respect to the funds applied to the purchase of the Suburb C and Suburb E properties relies upon the fact of the provision of funds to the Wife’s siblings and their respective partners, his application to include the entirety of the proceeds of sale of the Suburb G property as part of the assets and liabilities to be divided between the parties would appear to seek to set aside or at least disregard the gifts to the Wife’s siblings.
DISCUSSION
Of the final relief sought by the Husband, the only aspect which would directly impose obligations on either of the proposed additional Respondents or directly affect their rights is the order sought pursuant to section 106B with respect to the Suburb C and Suburb E properties. For the reasons outlined above, that application is flawed. It has no reasonable prospects of success and would not withstand a summary dismissal application.
The Husband’s claims with respect to the Suburb O and Suburb Q properties and the proceeds of sale of the Suburb G property are vague, unparticularised and involve double counting. His position with respect to these assets does not properly engage with the existence of the discretionary trust structures through which they are held, the fact that the Wife is not the sole appointor of any of the trusts and does not have sole control of any of them, or the limited extent to which the spouse parties have contributed to any of the trust property.
The balance of the final relief sought by the Husband is merely in the form of having the various properties listed above taken into account in calculating the respective entitlements of the spouse parties to the property of each of them. Even taking the Husband’s evidence at its highest (including the independent documentary evidence relied upon by him), the assertion that the Wife or the Husband and the Wife together hold the entirety of the beneficial interest in those properties would appear to be unsustainable, noting that such an assertion disregards not only the discretionary trust structures through which three of the properties are held but also the interests of Mr Meade and particularly Ms Donati, who has, on any view of the evidence, made the overwhelming majority (if not the entirety) of the financial contributions to the acquisition of those properties.
CONCLUSION
Having regard to all of the above considerations, I am not satisfied that the interests of either of the proposed additional Respondents may be directly affected by an issue in the proceeding or that their participation as parties is necessary for the Court to determine all the issues in dispute in the proceeding. As such, the Husband’s application with respect to joinder of these parties will be dismissed.
It follows from this that the Husband’s applications for interim injunctive relief will not succeed. In any event, the Husband has not adduced evidence which could satisfy the Court that the granting of the proposed injunctions is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage as required by section 90AF(3) of the Act, or that circumstances exist which could provide the foundation for the making of injunctions against strangers to the marriage other than by resort to the power in that section. Furthermore, having regard to the matters considered earlier in these reasons, the Husband has not satisfied the Court that the restraints sought by him are reasonably necessary to avoid a real risk that his claimed interest would be defeated,[36] and has not demonstrated that the balance of convenience weighs in favour of restraining the ability of either of the proposed additional Respondents to deal with the property held (beneficially or otherwise) by them.[37]
[36] Waugh & Waugh [2000] FamCA 1183; (2000) FLC ¶93-052.
[37] Sieling & Sieling [1979] FamCA 23; (1979) FLC ¶90-627; Stowe & Stowe [1980] FamCA 92; (1981) FLC ¶91-027; Wray & Wray [1981] FamCA 37; (1981) FLC ¶91-059.
For the reasons outlined above, I make the orders as set out at the commencement of this judgment.
I certify that the preceding one hundred and twenty-six (126) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Parker. Associate:
Dated: 30 October 2023
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