Pencious & Pencious - [2010] FamCA 605

FAMILY COURT OF AUSTRALIA

PENCIOUS & PENCIOUS

[2010] FamCA 605

FAMILY LAW – PRACTICE AND PROCEDURE – JOINDER – husband wishes to join wife’s parents as they were given a lump sum of cash at the time of separation – Husband then seeks injunctive relief against the parents and that the funds so disgorged be used as litigation funding monies – Application dismissed – Joinder will only occur where there is a cause of action shown and it is reasonably necessary to be so joined – No apparent cause of action on the papers and no necessity shown here –
Discussion about Part VIIIAA injunctions

Family Law Act 1975 (Cth)

B Pty Ltd and Ors & K & K [2008] FamCAFC 113
Hunt v Hunt and Others (2006) 36 Fam LR 64
Strahan & Strahan [2009] FamCAFC 166
Townsend & Townsend (1995) FLC 92-569
Valceski v Valceski (2007) 36 Fam LR 620

APPLICANT:

Mr Pencious

RESPONDENT:

Ms Pencious

INTERVENOR:

Mr and Mrs S

FILE NUMBER:

MLC

11069

2008

DATE DELIVERED:

20 July 2010

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

21 APRIL 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR SALAMANCA

SOLICITOR FOR THE APPLICANT:

BERGER KORDOS

COUNSEL FOR THE RESPONDENT:

MR WOOD

SOLICITOR FOR THE RESPONDENT:

ADRIAN ABRAHAMS FAMILY LAWYERS

COUNSEL FOR THE INTERVENOR:

MR NICHOLSON

SOLICITOR FOR THE INTERVENOR:

MARIA BARBAYANNIS & CO

Orders

That the application in a case of the husband filed 26 February 2010 is dismissed.
That save as to any issue of costs, the response of the wife filed 19 April 2010 is dismissed.
That save as to any issue of costs, the response of the wife’s parents filed 19 April 2010 is dismissed.
Certify that is was appropriate for a party to be represented by counsel.

IT IS NOTED that publication of this judgment under the pseudonym Pencious & Pencious is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11069 of 2008

MR PENCIOUS

Applicant

And

MS PENCIOUS

Respondent

And

MR AND MRS S
2^ndRespondents

REASONS FOR JUDGMENT

Rule 6.02 of the Family Law Rules 2004 makes clear that certain persons must be included as a party to a case. The rule relates to circumstances arising where the rights of third party persons may be directly affected by an issue in a case and where their participation as a party is necessary for the court to determine all issues in dispute in the case. The rule would seem to be sufficiently simple that a party can join a person fitting those circumstances by naming them on an application. In my view, it is not that simple.
The recipient of the application for joinder as well as all other parties to the litigation must be able to identify what material facts give rise to a cause of action against the party sought to be joined. Perhaps the practical test is whether the application would enable the party so joined or to be joined, to respond, in the sense of filing a defence to the claim.
This Court is not a court of pleadings so formal statements of claim and defence are not relevant. However, in B Pty Ltd and Ors & K & K [2008] FamCAFC 113 the Full Court set out the solution succinctly as follows:
In the usual run of applications for alteration of property interests or parenting orders, the fact of marriage or parenthood, accompanied, in respect of the former, by a history of contribution to and acquisition of, property and, in respect of the latter, evidence that relates to any aspect of a child’s interests, is sufficient to make the existence of a “cause of action” apparent. No pleading in the traditional sense is required to identify further facts material to the cause.
However, the narrative or descriptive nature of evidence is often unsuited to formulate or particularise a cause of action against a third party. Something resembling a statement of claim will generally be necessary.
After pointing to the jurisdictional basis upon which orders are sought (if they are), the application for joinder (or the person seeking to defend having joined a person) must be able to show that the rights of those persons may be affected by an issue in the case but also that participation is necessary to enable the court to determine all issues in the case.
On 26 February 2010, in proceedings that began in December 2008, the husband filed an application in a case seeking to join the wife’s parents and then to have injunctions made against them to pay money in their hands, into trust. The husband then sought orders that he have access to that money for litigation funding purposes.
The nub of the husband’s application was simple. He said that he had read an affidavit of the wife in which she deposed to having given her parents $150,000 out of a total of $165,000 cash that she acknowledged she took from a safe at the matrimonial home around the time of the parties’ separation. It was to this money that the husband looked for his litigation funding order.
The unusual feature of this case was that there was no dispute that money was taken by the wife from a safe. Separation was said to have occurred in 2008. That was about all that was agreed upon.
The husband’s position was that before separation, he sold a business and put $165,000 in cash in the safe. The wife’s position was that there was $330,000 in cash and she took half.
Supported by her parents, the wife said that she counted the money and was filmed doing so. The husband complained that the DVD had not been produced.
If there was only $165,000 in the first place, the husband did not explain why he waited for over a year to bring the action against the wife.
What seems to have triggered the litigation was the fact that the wife said she gave the money to her parents. She justified that course of action on the basis that her parents had lent them at least that amount of money to help build their house. The husband denied that saying he had provided the funds. The wife and her parents produced a written agreement of which the husband denied any knowledge. There seems little dispute that the husband did not sign the agreement.
In a factual sense, someone must be lying.
Turning then to the issue before me and looking at what I have earlier said, it would be hard on the material to say what cause of action the husband (or the husband and wife) has against the wife’s parents. When pressed, counsel for the husband said it was “for money had and received”. He argued that this issue would all be part of the one justiciable controversy and as such, the husband’s position would be that the court would hear that action on the basis of the accrued jurisdiction. An examination of the husband’s application makes clear that there is currently no application under s 106B of the Family Law Act 1975 (Cth) (“the Act”).
It is not clear from the husband’s affidavit what material facts would be relied upon in the cause of action for money had and received against the parents bearing in mind that the money is said to have been given to the parents by the wife as the repayment of a loan acknowledged by her. It does not seem to be suggested in the husband’s affidavit that the money in the safe, whatever amount is was, belonged exclusively to the husband.
The Full Court’s direction about particularizing a claim would therefore seem apt in this case.
Counsel for the husband argued that it was inappropriate to have the parents involved in some tactical part of the wife’s case where it was uncertain whether they would or would not be witnesses for her. He argued that in that vacuum, the parents, absent being parties, could not be ordered to provide discovery or answer interrogatories. He asserted that this was all part of a plan of the wife and her parents going back to 1990 to deplete family assets. He said the parents were inextricably bound up in the dispute between the husband and the wife. In my view, none of those matters has any legitimacy in this discrete application.
Counsel for the husband pointed to the wife’s initiating proceedings in January 2009 in which she filed an affidavit not mentioning one word of the taking or distributing of the money. Presumably, neither did the husband who acknowledged in his recent affidavit that there was money there and the wife had taken the lot. I have presumed as I must, that all of these factual statements and assertions have been specifically put to the Court on instructions.
There is much emotion in this case which has parenting disputes involving teenage children and a pending dispute about whether the wife should be permitted to have her current lawyer act for her.
The wife and her parents took a different approach to the application of the husband.
Counsel for the wife said that joinder would take the case nowhere. Even if the husband did have a cause of action as asserted, what difference would that make if the funds were then simply added back to the pool. Counsel pointed to the “premature distribution” issue in Townsend & Townsend (1995) FLC 92-569. If there was no basis for the wife to have done what she did because there was no loan agreement in the first place, the funds would be adjusted against her share. I agree with that view.
Whilst the husband was critical of the wife for her lack of credibility, so too was the wife critical of the husband including asserting that he was in contempt of court orders. I could not determine issues dependent upon credit in a hearing on the papers.
Counsel for the parents opposed being joined and adopted the arguments of the wife.
It is not sufficient to simply assert that there will be a cause of action as suggested nor is it sufficient to say that the applicant will rely upon Part VIIIAA of the Act. This is a case where a distinct statement of claim should be filed if any joinder is going to be contemplated because it is not clear whose money was taken nor whether it was simply a premature distribution of money to the wife to which she may have been entitled.
Even if there could be some factual inference drawn from the husband’s material, the injunctive order sought relies upon Part VIIIAA.
There can no longer be any doubt that the Court has power in relation to third parties (see Valceski v Valceski (2007) 36 Fam LR 620 and Hunt v Hunt and Others (2006) 36 Fam LR 64).
In relation to any injunction arising out of the powers of the Act, the requirements are that the order must be proper in all the circumstances. Before making the order however, despite the wide extent of the jurisdiction, there are legislative requirements in s 90AF(3)(a) which limit the circumstances in which orders directed to third parties can be made.
Section 90AF enables orders to be made under s 114 of the Act and that provision can only be exercised as part of the exercise as between the husband and wife under 114. The object of Part VIIIAA of the Act is said to allow the Court, in relation to the property of a party to a marriage, to grant an injunction under section 114 that is directed to, or alters the rights, liabilities or property interests of a third party. Here the property of the party to the marriage is the funds said to be taken by or given to the parents.
Section 90AF(3) is a rider on the extensive power. It permits the court only to grant an injunction under the subsection if the granting of the injunction is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage. (my emphasis). I do not need to go further than that in this case because I accept on the limited material that there are sufficient assets as between the husband and wife such that an adjustment could be made without resort to the money in the hands of the parents.
I do not accept therefore that it is proper, to use the word in s 114 of the Act, nor is it reasonably necessary or reasonably appropriate to make an order against the parents.
Finally in respect of the husband’s application for litigation funding, it must be clear that I could not make an order that the parents provide such a sum. During the hearing, counsel for the husband made an oral application for that funding to be made available through the parties having access to the equity in the family home. Ironically, it seems that both parties need funding for their cases. It was not a matter canvassed by counsel for the wife and in the circumstances, absent the consent of the wife, it is difficult to see how I could make the order without being satisfied that the evidence justifies it.
Having regard to the statement made by the Full Court in Strahan & Strahan [2009] FamCAFC 166, I could not be sure about what power I was being asked to use nor whether there was sufficient evidence to enable any of the criteria in ss 79, 80 or 117 to be satisfied.
The husband’s application must be dismissed.

I certify that the preceding Thirty Two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 20 July 2010