Woodham and Woodham and Ors
[2018] FamCA 462
•20 June 2018
FAMILY COURT OF AUSTRALIA
| WOODHAM & WOODHAM AND ORS | [2018] FamCA 462 |
| FAMILY LAW – PROPERTY – where the wife joins a number of entities and the executrix of the late mother of the husband using generic orders seeking relief against them – where the joined parties seek removal on the basis of the absence of any specific relief against them – where the wife maintains that absent discovery, she cannot plead with particularity – where the joined parties seek summary dismissal – where the court permits the pleadings to be rectified but otherwise removes one party – where the matter is adjourned to allow those matters to be attended to. |
| Family Law Act 1975 (Cth) |
| AC and Ors v VC and Anor [2013] FamCAFC 60 B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 Beck and Beck (2004) FLC 93-181 Bretton & Bondai [2013] FamCAFC 168 General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 Gould v Gould; Swire Investments Ltd [1993] FamCA 126; (1993) FLC 92-434 Hunt v Huntand others [2006] FamCA 167 Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd [2013] VSCA 158 Moriarty & Moriarty [2009] FamCA 369 Spellson and Spellson (1989) FLC 92-44 at 77,520 |
| APPLICANT: | Ms Woodham |
| 1ST RESPONDENT: | Mr Woodham |
| 2ND TO 14TH RESPONDENTS: | Ms Gleeson in her capacity as the Executrix in the Estate of the Late Ms P Woodham And Each of the Trustees of the Trusts named in the schedule to the further amended initiating application filed by the Applicant wife on 31 January 2018 |
| FILE NUMBER: | MLC | 11101 | of | 2016 |
| DATE DELIVERED: | 20 June 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 12 June 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Bartfeld QC with Mr Sweeney |
| SOLICITOR FOR THE APPLICANT: | Lander and Rogers |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Strum QC with Mr Nehmy |
| SOLICITOR FOR THE 1ST RESPONDENT: | Tisher Liner FC |
| COUNSEL FOR THE 2ND TO 14TH RESPONDENTS: | Mr North SC with Ms Renwick |
| SOLICITOR FOR THE 2ND TO 14TH RESPONDENTS: | KCL LAW |
Orders
That the wife has leave to file and serve an amended initiating application by 4 pm on 31 July 2018.
That E Pty Ltd as trustee for E Unit Trust is removed from the proceedings as a respondent.
That paragraphs 2 and 4 of the application filed on 30 May 2018 by Ms Gleeson and each of the trustees of the trusts named in the schedule to the amended application of the wife filed 31 January 2018 are dismissed.
That any application for costs (as presently sought in paragraph 5 of the said application filed 30 May 2018 shall be dealt with by written submission with such submissions being filed and served by 4 pm on 31 July 2018 and any written submission in response thereto shall be filed and served by 4 pm on 17 August 2018 and such determination arising therefrom shall be determined in chambers.
That otherwise, all outstanding applications including any amended application as foreshadowed by paragraph 1 hereof are adjourned to the judicial duty list at 10 am on 4 September 2018.
If the parties resolve any and all issues prior to 4 September 2018, they have leave to seek to vacate that return date.
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 Woodham & Woodham 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 11101 of 2016
| Ms Woodham |
Applicant
And
| Mr Woodham |
1st Respondent
And
Ms Gleeson in her capacity as the Executrix in the Estate of the Late Ms P Woodham
and
Each of the Trustees of the Trusts named in the schedule to the further amended initiating application filed by the Applicant wife on 31 January 2018
2nd to 14th Respondents
REASONS FOR JUDGMENT
Ms Woodham (the wife) commenced proceedings against Mr Woodham (the husband) in 2016. She then joined Ms Gleeson (the executrix) the sister of the husband. Ms Gleeson is also executrix of the estate of their mother Ms P Woodham who died in February 2015. Other parties joined include 12 companies as trustees of various trusts. On their application filed 30 May 2018, the executrix and the entities seek that the wife’s application in relation to them be summarily dismissed and that they be removed as parties.
The basis of the argument of the executrix and the entities is that the wife has no reasonable likelihood of success as against them. In the alternative, if unsuccessful on that first point, they seek that the wife serve a further application seeking that each entity be listed as a separate party (presently a common order is sought against them) and that she plead specific relief against each so that each knows what to meet.
In my view, it would not be proper to dismiss the proceedings and/or remove all the entities, but there is a justification for some removal as I shall discuss. Whatever orders should be made here, I certainly agree with the alternate proposal of the executrix and the entities.
The husband did not seek specific relief in this hearing but supported the submissions of the executrix and the entities.
The impugned relief sought by the wife is described by its paragraph numbers in the application but I am conscious that the substantive relief is described as the wife seeking as against the husband, a 45/55 per cent split of property and that thereafter there be various orders “as may be necessary, adapted, proportionate and appropriate”. As the main applicant is the executrix and the entities rather than the husband, it is to their focus on paragraph 8 of the wife’s application that I have to turn. It is only those matters to which these reasons relate.
In 8.1, the wife seeks that, relying upon s 106B, a deed extending the vesting date of a trust be set aside. This deed was executed by Woodham Pty Ltd as trustee of the Woodham Family Trust. The determination of this matter depends upon whether a submission on behalf of that trust is accepted that s 106B cannot apply. I shall return to that issue but it only affects that trust.
In 8.2, the provisions of s 90AE are relied on by the wife to seek an order that the executrix in her capacity as the trustee of the Estate of Ms P Woodham Trust No 2 do all that is required to transfer the husband’s interest in that trust to the wife. That order could only be made if the husband had a legal or equitable interest in the property of the trust. If he did, the trustee could be ordered to disgorge it. It is unclear why the trustee would need to be a party for that purpose after a consideration of s 90AE(3)(c). To blur the picture a little, the wife suggests that she may seek to rely on s 85A of the Act
The wife did not press 8.3 but I need to return to that further later.
In 8.4, the wife seeks to set aside any election or step taken to exclude the husband as a beneficiary of the relevant testamentary trust. This is not relief directed to anyone and as such could not be an order made by the court in its present form. The wife’s submission is that she does not need to plead with particularity at this stage. I disagree.
I pass over 8.5 at this point as it is the more difficult of the matters to contemplate.
In 8.6, which is found in the wife’s reply document filed 5 June 2018, she sought that pursuant to s 106B of the Act, “the notice” said to have been given by the executrix to the husband on 22 December 2016 that he is deemed an ineligible person under the will be set aside. This raises questions of whether the “notice” deemed the husband an ineligible person or that it arose as a result of other circumstances contemplated under the will. Either way, I have presumed that the relief sought is against the executrix because the notice was said by the wife to have been given to the husband in the capacity as executrix. On one reading of the will, it was not a notice or election that gave rise to the husband being ineligible (if indeed he is) but by circumstance of the family breakdown as it is described in the will. My reading of materials limits what findings can be made because the evidence is neither complete nor tested all of which is relevant to dealing with a summary dismissal application.
The starting point is Rule 10.12 of the Family Law Rules 2004. It provides:
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a) the court has no jurisdiction;
(b)the other party has no legal capacity to apply for the orders sought;
(c)it is frivolous, vexatious or an abuse of process; or
(d)there is no reasonable likelihood of success.
The entities rely on (d).
It is trite to say that summary dismissal is not relief lightly considered. Indeed, “exceptional caution” must be used and the power should be “sparingly employed” (Barwick CJ in General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 at 129).
The principles to be applied can be found in Beck and Beck (2004) FLC 93-181:
17. … (see Bigg v Suzi (1998) FLC 92-799 at 84,973-84,974; and also Pelerman v Pelerman (2000) FLC 93-037 at 87,582):
“‘(a) The power for summary dismissal is a discretionary one.
(b) Relief “is rarely and sparingly provided”.
(c) The parties seeking summary dismissal must show that the application is “doomed to fail” or as has been otherwise described “that the opponent lacked a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”.
(d) A weak case or one that is unlikely to succeed is not “sufficient to warrant termination”.
(e) “If there is a serious legal question to be determined, it should ordinarily be determined at a trial”.
(f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings”.’
In determining an application of this nature … the rule … is that if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the court to proceed on the basis that the respondent's version will ultimately be accepted at the trial of the action (see Webster v Lampard (1993) 177 CLR 598 at 608).”
…
20.Further support for the proposition that an application for summary dismissal must be determined on the basis only of the material put forward by the respondent (to that application) is to be found in the passage from the judgment of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-5 (which was quoted by the Full Court in its judgment in Bigg v Suzi) where his Honour said:
"... 2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action (Munnings v Australian Government Solicitor (1994) 68 ALJR 196 at 171f, per Dawson J) or in advancing a claim that is clearly frivolous or vexatious; (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.)”
In addition to the remarks of Kirby J, there is the test in General Steel (supra) and senior counsel for the executrix and the entities also relied on the authorities of Bretton & Bondai [2013] FamCAFC 168 and the Victorian Court of Appeal decision of Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd [2013] VSCA 158 but for my purpose, the authorities do no more than provide guidance when considering the otherwise clear words of the rule. The focus specifically here is that the wife’s claim has “no reasonable likelihood of success”.
As the litigation is in its early stages, I am very mindful that if there is a serious legal question to be determined, it should ordinarily be determined at a trial (see Beck) but so too, where there are “defects” in the nature of the procedural claims (in some courts, pleadings) and where there is still evidence of the possibility of a reasonable cause of action, the Court will ordinarily allow redrawing of the application. In the absence of cross-examination, the court normally proceeds on the basis that the respondent's version will ultimately be accepted at the trial and in this case, it is made more difficult because of the submission put by the wife.
Underpinning the application for summary dismissal here is the argument that there has to be an identifiable cause of action shown against a party joined but it is missing here. There is no better example than the wife’s joinder of the E Unit Trust to which I return in a moment.
In B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113 the facts of which are similar to the present case, the Full Court referred (at [45]) to Gould v Gould; Swire Investments Ltd [1993] FamCA 126; (1993) FLC 92-434 where Fogarty J (with Nicholson CJ and Finn J agreeing) said (at 80,451):
I conclude, consistently with Buckeridge and Barro, that the correct procedure, where an applicant in proceedings under the Family Law Act seeks relief against a person who is a stranger to the marriage or relationship, is to name that person as an additional respondent in the proceeding and set out the nature of the claim and the basis of it in the ordinary way in the application. (emphasis added)
and at [46] the Full Court went on to say:
[46]Of relevance to the procedure adopted in the instant case, Fogarty J had also earlier said (at 80,448):
...good case management and fairness to the parties, in particular to a third party, suggest that in appropriate circumstances the claim against a third party, or more particularly the jurisdictional base of that claim, be determined as a preliminary issue where it is appropriate and practical to do so. ...(again my emphasis)
The trial judge in B Pty Ltd had outlined the relief sought but not insisted on a statement of claim or equivalent. At [52], the Full Court said:
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.
In the submission on behalf of the wife in the present proceeding, her counsel began by referring to the fact that the wife was “limited in her ability to set out with precision the parties’ interests due to the lack of relevant financial disclosure to date.” That is different from being limited in her ability to define the parties with precision but on the basis that summary dismissal is a high bar and only cautiously granted and in circumstances where the procedural steps can be rectified, that should be permitted rather than have the proceedings dismissed. I am very conscious that this proceeding has been on foot since 2016 and there have been delays in dealing with this interlocutory application due to court resources.
It is then appropriate to turn to 8.5 of the wife’s application. Only paragraph 8.5 actually seeks relief against most of the entities. The entities and executrix forcefully argue that whilst they may have been joined as a party, the court had to have sufficient facts on the wife’s case to demonstrate the presence of a cause of action and that nothing had been put forward to demonstrate that the law arguably provides the relief sought here.
In 8.5, the wife seeks to use s 90AE of the Family Law Act 1975 (Cth) (“the Act”) to bring forward the vesting date of each of the trusts named as entities. However, there is a confusing and complicating factor in that the wife has included as the 10th respondent, E Pty Ltd as trustee for E Unit Trust, but in 8.5, excluded it from the order proposed. As Mr North submits, absent some relief sought against E Unit Trust, there is no basis for it to be a party.
Mr Bartfeld’s response was not to explain the reasoning but to submit that “it may be that (this trust) is an asset of the G Trust”, the 9th respondent. The only basis for the position of the wife is that one trust may have assets in another and that therefore, enforcement of orders may be necessary but just how that connects is not said. Accordingly, based on the test in Re: B Pty Ltd, the 10th respondent should be removed.
A further complaint of the entities about having been joined and facing one broad proposed order for relief and the insufficiency of the pleading can also be seen in 8.5 . I do not know whether each trust faces one and the same claim or a different claim and if so, on what basis. That too faces the problem raised by Re: B Pty Ltd but in my view, it is not normally a basis to summarily dismiss the wife’s claim but rather, to permit rectification of the formal application.
The substance of the case put by Mr North for the entities and supported by Mr Strum QC on behalf of the husband is that the entities were all being brought (and absent some attention to the claims will continue to be brought) “along for a ride at large expense”. There is substance to this complaint but in my view, it is not presently fatal. That does not mean that it may not be in the future.
Returning to the rest of the argument in 8.5, even if the court allowed rectification, I am conscious of Mr North’s submission that if the wife relies on s 90AE, it does not assist her. He submitted that what the wife was endeavouring to do was create a new interest in property rather than enabling the court to divide property of the husband and wife that already existed. This again brings me back to Re: B Pty Ltd which makes clear that there must be sufficient facts asserted to demonstrate that, if proved, the law arguably provides the relief sought. Mr North asserts that the law does not assist the wife even if there are facts that she wants to rely upon.
Section 90AE(2) of the At provides that in s 79 proceedings, the court is empowered to make an order that directs a third party to do “a thing” in relation to the property of a party to the marriage or that alters interests of a third party in relation to the marriage. As the wife relies upon that provision, it is important to understand what it means.
It was submitted by the entities that there must be a connection between the property interests of the third party and the party to the marriage because of the use of the words “in relation to the marriage”. Section 90AE was considered in Re: B Pty Ltd where what O’Ryan J said in Hunt v Huntand others [2006] FamCA 167 was approved. His Honour had said that what was contemplated by the provision was an alteration of rights sufficiently connected to the division of the property between the parties to the marriage. In Re: B Pty Ltd, the Full Court said the words “in relation to the property of a party to the marriage” were words of limitation, not expansion. (see also AC and Ors v VC and Anor [2013] FamCAFC 60). Thus the wife has to show how her proposed orders are designed to effect the division of property of a party to the marriage to justify the Court imposing duties, responsibilities and liabilities on third parties who must be treated as separate entities from the husband until some evidence to the contrary is shown. The evidence of Mr Gleeson to which I soon turn asserts that there is no connection in terms of control but that the husband is a beneficiary.
The application of the wife, as drawn, is directed to all of the trusts. Counsel for the executrix and entities submitted that the criteria for the reliance on s 90AE had not been met where the husband and wife had never had possession or control of the assets. That seems correct where the assets were owned by the husband’s mother and it would seem her intention was not to give them to the husband absolutely but rather, to create a testamentary trust which ultimately may have been intended to benefit the husband. As counsel submitted, the deceased’s will indicates how she wanted her assets dealt with. It is therefore submitted that s 90AE is not available. It is therefore submitted that the wife’s claim should be summarily dismissed in that area.
Counsel for the wife submitted that only the husband and the executrix are the children of the deceased and the executrix is married to a solicitor who swore (Mr Gleeson) an affidavit days before this matter was argued in the duty list. The affidavit was filed on behalf of the executrix and the entities but senior counsel for the wife submitted that it could have provided details about the values of the trusts. He submitted that its absence put the wife in the position that she had to establish these values. It was this that formed the basis of the wife’s dilemma that she could not make up her mind about final orders until those details were established.
In addition, senior counsel for the wife submitted that because no property had been transferred to the two testamentary trusts, the wife did not know when that was likely to occur. The wife asserts that she is not receiving assistance from the executrix and the entities.
The solicitor to whom senior counsel for the wife referred, Mr Gleeson, said that he had been providing commercial and legal advice to the entities which he described as a group. He pointed to the fact that these entities arose from a business built up by the deceased and her late husband. He set out the history of some of the operations and observed that the husband has not been involved in the management, investment or day-to-day operations of the group but he had undertaken some tasks when requested. The evidence of the wife which was filed in November 2016 seems to assert the contrary.
Mr Gleeson went on to describe some of the trusts including, for example, the G Trust in which the husband had no control but was a specified beneficiary. The general beneficiary class was widely defined. Of the other trusts joined by the wife, Mr Gleeson set out that the husband had a beneficiary entitlement but the control rested with the executrix and another person. That is not necessarily the case in all entities but the point being made was that the husband’s entitlement was limited to that of a beneficiary. In respect of the specific concern of the wife about the Woodham Family Trust and the extension of the vesting date, Mr Gleeson explained that action had been contemplated for some years and was undertaken to enable that trust to “vest in line with the rest of the trusts”. This evidence could not be the subject of testing but I understand the wife does not necessarily accept that proposition.
It is clear from the submissions of senior counsel for the wife that whilst these explanations do not resolve the wife’s concerns, her indecisiveness in my view is not a basis for what has occurred to date for the reasons that have already been articulated. Whilst senior counsel for the wife submitted that there was no opportunity to pursue third party discovery in this Court, I observed that there were ways around that including making an application to apply for procedures where the rules do not assist the expeditious resolution of the court’s business.
In this interlocutory hearing, I am not in a position to make findings about many of these matters and do not need to do so but the submissions on behalf of the entities and the executrix are powerful where the wife’s own senior counsel submits that the wife is unsure what steps she is going to take. In my view, despite her dilemma, the wife has to plead with particularity and join only those parties who have the requisite connection with the husband and wife if she relies on s 90AE because otherwise, as was submitted by senior counsel for the executrix, all of these people are being brought along for a ride at large expense.
Because of the way that the Full Court approached the view of s 90AE, I consider each trust should be separately joined and relief specifically pleaded against that particular entity showing the relevant connection as I have described. As this is an application for summary dismissal and I have accepted that the wife should be given an opportunity to redraw her application, it is not appropriate that I dismiss the application as against those parties.
I turn then to 8.6 where the wife seeks relief (which is found in her reply document) that a notice said to have been provided by the executrix on 22 December 2016 deeming the husband an “ineligible person” under the will of the deceased be set aside. In my view, that pleaded relief is also problematical.
The wife’s understanding as articulated in her written and oral submissions is that in respect of the deceased estate, after distribution of modest gifts, the executrix was to divide the residue into equal parts to be held on trusts which were created in accordance with the testamentary trusts provisions of the will. It is uncontroversial that there are two beneficiaries, the executrix and the husband. Two trusts have been created. Only one of those has been joined and that is The Estate of Ms P Woodham Trust No 2. This trust has as its focus, the interests of the husband but much of the outcome of any entitlement depends upon the wording of the will.
The wife’s submission was that she understood that no distributions had been made into the trusts and that seems to be the evidence of Mr Gleeson. Then, it was submitted:
[19]In order to give effect for the adjustment of property between the spouse parties, the wife may need to seek an order for the executor of the estate to make distributions to the trust which is now described as the husband’s testamentary trust.
My concern here is whether the husband remains (if he ever was) the trustee of The Estate of Ms P Woodham Trust No 2. On my reading of the deed, the husband may not be. The wife said that if the court found that to be the case, it would be another basis upon which the executrix would need to be joined. One of the difficulties is that I am dealing with this matter on submissions and without the benefit of the testing of the evidence. The question arises as to which interpretation is correct.
On my reading of the will, and I could be mistaken, the interpretation will need to examine the meaning of the words “family breakdown”. I read it as referring to a state of the relationship, relevantly in this case, that of the husband. In this case, the husband’s relationship with the wife, according to the wife, came to an end after the death of the deceased. There are several questions that arise and about which I am unable to make any finding on the untested evidence. For example, is there a difference between a family breakdown which is defined in the will as commencing when the relevant person ceases to live with their spouse and the perhaps subtle distinction between the end of a relationship and the irretrievable breakdown of a relationship?
Mr Bartfeld submitted that paragraph 14.4(d) in relation to the family breakdown did not stipulate any notice period and that therefore the clause was invalid. He submitted that if he was wrong about that, the provisions of s 106B could be applied in the alternative. The difficulty I have with the suggestion that relief lies in s 106B is that on my interpretation of paragraph 14 of the will, the executrix automatically became the trustee by virtue of the separation of the husband and the wife and any notice provision was irrelevant. I reject the submission that the notice provision is invalid as it is clear and concise.
If the husband falls into this family breakdown category, it is conceivable, and I think open to interpretation, that he faces the potential loss of control over any entitlement under the trust.
Senior counsel for the wife began by referring to the nomination made by the executrix removing the husband from the position of trustee of this testamentary trust. He submitted that the nomination may need to be set aside. In his affidavit filed on behalf of the executrix and the entities, Mr Gleeson referred to the notice in writing dated 22 December 2016 and said that it had been given by the executrix but he said no more. The question on my reading of the will is whether the notice was at all necessary as distinct from the outcome arising from the operation of the will itself.
It was submitted on behalf of the wife that the reason why the executrix ought to remain as a party was that “orders may need to be made compelling the trustee of the testamentary trust to do certain things to give effect to the wife’s application” under s 79 of the Act.
It is again the use of uncertain words such as “may need to be” that is concerning. The executrix and the entities say the wife’s approach is not good enough and they should not have to be a party to this litigation. In line with the position I earlier adopted arising from Re: B Pty, the wife needs to rectify the position.
Senior counsel for the executrix and entities submitted there was no utility in 8.6 because of clause 14.4 (c) of the will. This is the argument that in relation to a primary beneficiary or a specified beneficiary, “family breakdown” is defined and the husband falls into that category. The definition contemplates a period which can only end when a property settlement under the Family Law Act is concluded. If ineligible, that person “shall be deemed to have resigned as trustee” and the executor of the will other than the ineligible person, shall be the trustee instead.
It was submitted by counsel for the entities that clause 14 is not a disposition separate from the disposition that favours the husband under clause 7. I accept that submission. It is clause 7 that establishes trusts in which the husband is a primary beneficiary and clause 14 establishes the terms of those trusts.
The wife no longer presses the relief in 8.3 of her application nor could she and it is tolerably clear on reading the will that it is not an instrument of trust but trusts are created under it. That gives rise to issues of whether s 106B of the Act is wide enough to enable the wife to achieve the relief that she seeks. Counsel for the executrix and entities submits that it is not and there is no power to vary an instrument or disposition. It is submitted that the power is to set aside the whole of an instrument or disposition and thus, the court could not set aside the will. That seems to be accepted by the wife.
Counsel for the executrix and entities referred to the affidavit of the wife filed on 15 November 2016 and said that she “seeks to sever” clause 14.4 of the will. That conclusion could only have come from 8.3 of the application and that is no longer pressed.
At paragraph [51] of submissions prepared on behalf of the wife, it was said that the wife may seek to rely on the ancillary power provided for in s 85A of the Act with respect to property held in the relevant testamentary trust. Counsel submitted that the trusts represented post-nuptial settlements.
It is not necessary that I deal with this submission at all because no such relief is pleaded but also because the submission said:
[54]For the purposes of this threshold issue before the Court it is not necessary to particularise whether the Court will in fact be asked to make Orders pursuant to section 85A….until all the evidence unfolds in relation to how property is held….
This submission seems to be directed to the wife’s 8.2 which relies on s 90AE and I have already dealt with that. However, to the extent that the prospect of an amended application being pleaded in the alternative, the cautionary approach set out by Nygh J in Spellson and Spellson (1989) FLC 92-44 at 77,520 and his Honour’s reference to Public Trustee (S.A.) and Keays (1985) FLC 91-651 needs to be read. As this is not an issue for me now, I need not deal with it.
Clause 14.5 requires the written consent of the husband before amending the terms of the beneficiary testamentary trust, nominating its ending date and the like. It was submitted that given that the husband is the primary beneficiary of the trust, (clause 14.5) simply reinforces the fact that he has the ultimate control of the property in the trust for his benefit and consequently gives rise to an interest in property to which the jurisdiction of s 79 applies.
I turn back to the wife’s 8.1 and the bringing forward of the vesting date. The wife seeks pursuant to s 106B of the Act, a deed executed by Woodham Pty Ltd (in its capacity as the trustee of the Woodham Family Trust)(the 8th respondent) on 13 December 2016 be set aside. This transaction was said to extend the vesting date of the trust from 1 October 2020 to 14 February 2050.
The submission of Mr North SC for the 8th respondent is that this occurred after the proceedings of the wife were already on foot.
The wife relies on s 106B of the Act which provides that in proceedings under the Act, the court may set aside (or restrain) the making of an instrument made or proposed to be made to defeat an existing or anticipated order. I have earlier set out the evidence of Mr Gleeson as to why this occurred. But, leaving aside that evidence which might be said to affect the exercise of discretion anyway, the executrix argues that s 106B does not assist the wife.
Mr North submitted that this was a discretionary provision and the wife had to establish the necessary elements first. He submitted she could not succeed because the deed could not have defeated an existing or anticipated order. The chronology here is relevant. The proceedings were commenced on 15 November 2016 and under the original terms of the deed, the Woodham Family Trust would not have vested until 1 October 2020. Mr North assumed that given the November 2016 date, the litigation would have been concluded and orders made before the original vesting date. Thus, he submitted, any amendment would not have defeated an anticipated order.
The wife would have to establish that a reasonable disponer would have foreseen, or considered it likely, that as at 13 December 2016, and the final orders would not have been made until after 1 October 2020. On the anticipated time frames for conclusion of proceedings, it was submitted that it was “highly probable” that orders would have been made before 1 October 2020 and therefore, the wife could not succeed.
There appears to be some substance to this submission but as I intend to give the wife an opportunity to rectify the application, I presume that she will determine whether she wishes to proceed with that relief. I decline therefore to deal with it further.
The wife’s reply filed on 5 June 2018, also sought injunctive relief against the executrix from disposing or dealing with any of the assets and/or income of the trusts which were otherwise respondents save in the ordinary courses of the relevant trust businesses without first giving her notice. She also sought a restraining order that the executrix not take any step to alter the structure of any of the trusts or appoint or remove the trustees without first giving notice.
Mr North (without admission) gave the Court an assurance that the executrix would comply with the wife’s request but only until judgment. He submitted that the assurance could not be sought beyond that time and indeed, an order could not be made beyond that time in case the relevant parties were no longer parties to the proceedings. His submission remained that these entities could only be joined if there was relief against them sought.
In my view, there is no basis at this stage to grant the injunction where the case of the wife is fluid. It is a third party injunction and there are clearly powers in the Act for the Court to restrain activity which would amount to an abuse of the court’s process or if something that was done to thwart the wife’s claim. At the moment, absent some clear understanding of what judgment or relief is to be protected, an injunction should not be granted.
In the affidavit of Mr Gleeson to which I have already referred, the solicitor said that he was informed that the recipient complied with the subpoena and had provided an invoice to the solicitors who issued it and apparently as a result of lack of response, there were four follow-up letters. Mr Gleeson then said that he sought an order that the recipient of the subpoena be paid his costs of compliance. I do not treat that as an application by the subpoenaed person but by the entities.
No application has been made to the Court by the subpoenaed person for out of pocket expenses (rule 15.23(2)). Having regard to the need for the recipient to establish that he has incurred substantial costs over and above the amount provided to him, it is difficult to see how I could determine that issue in the way that the executrix and the various companies request. It is an issue as between the recipient and the party seeking to have the subpoena issued (see Moriarty & Moriarty [2009] FamCA 369) and as there has been no quantum fixed by the Court, I do not consider I have the power to determine the issue.
In respect of other relief outside of the discrete matters above, the husband sought no interlocutory relief and specifically did not seek summary dismissal of the claim by the wife against him. His substantive position is that on the wife’s application, it would not be just and equitable to make any orders at all. Mr Strum QC for the husband reminded the Court that his client would be seeking a bifurcation of the proceedings to determine what he described as a “threshold” issue. It is unnecessary for me to deal with that further.
I make orders therefore consistent with the underlying reasons.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 20 June 2018.
Associate:
Date: 20 June 2018
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