FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Yong & Weng [2024] FedCFamC1F 440
File number(s): MLC 12940 of 2022 Judgment of: STRUM J Date of judgment: 28 June 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Joinder application – Where the wife seeks to join the husband’s brother and a corporation of which he is the sole director as the proposed second and third respondents – Where the husband made payments to his brother shortly after separation totalling $465,000 – Where the wife alleges that the payments were a disposition within the meaning of s 106B – Where the wife seeks that the payments be set aside and paid to her in specie – Where the wife’s statement of claim seeks relief not the subject of her application filed in the proceeding – Court not a court of pleadings –
Pleadings to be in accordance with the High Court Rules 2004 (Cth) – Purpose of pleadings in this Court considered – Where the respondents argue that there is a substantial net asset pool and that setting aside the payments is unnecessary and they can be added back – Where the respondents seek a summary dismissal of the wife’s s 106B application – Where the respondents do not apply the correct test for a summary dismissal – Where the wife’s s 106B application does not presently have no reasonable likelihood of success – Where it is unnecessary to join the corporation to the proceedings for the relief sought by the wife – Orders for the husband’s brother to be joined to the proceedings – Wife’s statement of claim struck outLegislation: Family Law Act 1975 (Cth) ss 78, 79, 90AE, 106B
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 26, 46, 56, 62
Explanatory Memorandum to the Federal Circuit and Family Court of Australia Bill 2019 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.05, 2.01, 2.18, 2.21, 3.01, 3.03, 8.14, 10.09
High Court Rules 2004 (Cth) rr 27.02.2, 27.04, 27.09.5
Cases cited: A Bank & Coleiro and Anor [2011] FamCAFC 157
AJO & GRO [2005] FamCA 195
Arnold & Arnold [2021] FamCA 226
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
B Pty Ltd and Ors & K and Anor (2008) FLC 93-380
Friar & Friar [2011] FamCAFC 71
Galante & Galante and Ors [2019] FamCA 756
Gelley & Gelley (No. 2) (1992) FLC 92-291
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Gould & Gould & Swire Investments Ltd (1993) FLC 92-434
Hankinson & De Vries and Ors [2013] FamCA 455
Jordan & Sutton (No 2) [2022] FedCFamC1F 850
John Alexander’s Clubs Pty Ltd v White City
Tennis Club Ltd (2010) 241 CLR 1
Kayce & Wilda (No 2) [2024] FedCFamC1F 405
Lund & Whittall [2024] FedCFamC1F 271
Pagliotti & Hartner [2009] FamCAFC 18
Pencious & Pencious [2010] FamCA…
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- AGLC
- Yong & Weng [2024] FedCFamC1F 440
- Case
- [2024] FedCFamC1F 440
- Decision Date
CaseChat Overview and Summary
In the case of Yong & Weng, the wife sought to join the husband’s brother and a corporation of which he was the sole director as respondents in her application under s 106B of the Family Law Act 1975 (Cth). She alleged that the husband had made payments to his brother amounting to $465,000, which she claimed were dispositions intended to defeat an anticipated order in the proceedings. The husband and his brother argued against the joinder, asserting that there were sufficient assets available for division between the husband and the wife and that the corporation’s rights would not be directly affected by the application for declaratory relief. The central legal issue was whether the brother and the corporation should be joined as respondents and whether the wife’s statement of claim should be struck out. The court considered the purpose of pleadings and the necessity of joining additional parties to determine the dispute.
The court concluded that while the brother should be joined as a respondent, the corporation need not be. The court found that the wife's statement of claim did not conform to the requirements of the High Court Rules 2004 (Cth) and needed to be re-pleaded in points of claim to support the relief sought against the brother. The court rejected the argument that the joinder application had no reasonable likelihood of success, noting that the evidence suggested the payments might be improper. However, the court also noted that if the wife were ultimately unsuccessful, she would likely have sufficient assets to meet any costs order against her. The court ordered that the brother be joined to the proceedings, the wife's statement of claim be struck out, and she file points of claim within 28 days.
The final orders included joining the brother as a second respondent, dismissing the application to join the corporation, striking out the wife's statement of claim, and requiring the wife to file points of claim within 28 days. The balance of the wife’s application was adjourned for case management and potential relisting before the court. The court also noted that any costs applications could be made after the finalisation of the proceedings.
The court concluded that while the brother should be joined as a respondent, the corporation need not be. The court found that the wife's statement of claim did not conform to the requirements of the High Court Rules 2004 (Cth) and needed to be re-pleaded in points of claim to support the relief sought against the brother. The court rejected the argument that the joinder application had no reasonable likelihood of success, noting that the evidence suggested the payments might be improper. However, the court also noted that if the wife were ultimately unsuccessful, she would likely have sufficient assets to meet any costs order against her. The court ordered that the brother be joined to the proceedings, the wife's statement of claim be struck out, and she file points of claim within 28 days.
The final orders included joining the brother as a second respondent, dismissing the application to join the corporation, striking out the wife's statement of claim, and requiring the wife to file points of claim within 28 days. The balance of the wife’s application was adjourned for case management and potential relisting before the court. The court also noted that any costs applications could be made after the finalisation of the proceedings.
Orders
Orders of the court
MLC 12940 of 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:
MS YONG
Applicant
AND:
MR WENG
Respondent
MR B WENG
First Prospective Respondent
C PTY LTD
Second Prospective Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
28 JUNE 2024
THE COURT ORDERS THAT:
1. Mr B Weng be joined to this proceeding as the second respondent.
2. Paragraph 2 of the Application in a Proceeding filed by the wife on 5 September 2023 be dismissed.
3. The Statement of Claim filed by the wife on 13 October 2023 be struck out.
4. Order 1 of the Orders made by a Registrar be discharged.
5. Within 28 days, the wife file and serve points of claim in support of the relief sought by her:
(a) against the second respondent, pursuant to s 106B of the Family Law Act 1975 (Cth), in paragraph 3 of her further amended Initiating Application filed 13 October 2023; and
(b) in relation to the declaratory relief in paragraph 13 thereof.
6. Paragraphs 3, 4, 5 and 6 of the wife’s Application in a Proceeding be adjourned to a Senior Judicial Registrar on a date to be fixed for determination, insofar as the relief sought therein is within their delegated powers, and otherwise for case management and, if necessary, relisting before the Honourable Justice Strum.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
Background
Background to the litigation
For the reasons that follow, I shall order that the brother, but not C Pty Ltd, be joined as a further respondent to this proceeding but that the wife’s statement of claim be struck out and re-pleaded, in points of claim. to support the relief sought by her pursuant to s 106B of the Act and for declaratory relief in her further amended Initiating Application. BACKGROUND The gravamen of the wife’s joinder application is that the Payments made by the husband to his brother constitute a “disposition by … a party, which is made … to defeat an … anticipated order in [these] proceedings” within the meaning of s 106B(1) of the Act. She points to what she asserts, and prima facie appear, to be inconsistent explanations proffered by the husband and his brother for the Payments, including:·repayments by the husband of a loan (undocumented or documented) alleged to have been made by the brother to him in about 2016 for the start-up costs of their business, G Company, including the fit-out of D Street; or ·repayment by the husband of an alleged shortfall between his half-share of the rent actually paid by him, and market rental, for D Street. In this latter respect, it appears that the rent actually paid was somewhere between $19,800 - $23,160 per annum but it is asserted that market rental that allegedly should have been paid was in the order of $140,000 per annum. The husband and his brother deny any impropriety in relation to the Payments and oppose joinder of the brother and C Pty Ltd, in summary, on the grounds that: ·In the case of C Pty Ltd, its rights will not be directly affected by the application for declaratory relief, in circumstances where the wife does not seek any consequential relief in her further amended Initiating Application in relation to husband’s alleged equitable interest in D Street.·In the case of both the brother and C Pty Ltd, their participation as parties is not necessary for the Court to determine all issues in dispute in the proceeding, as required by r 3.01 of the Rules. The propriety or otherwise of the Payments is an issue for trial. However, the husband and his brother contend that the participation of the brother as a party is not necessary as they assert that, even on the wife’s case, there are sufficient assets available for division between the husband and her at trial. In this regard, they rely primarily upon Gelley & Gelley (No. 2) (1992) FLC 92-291. The husband’s case, as summarised in his Case Outline, and largely consistent with that of his brother, is that, whilst in his affidavit filed on 23 December 2022, he deposed that the Payments were in repayment of monies lent to him by his brother on account of the establishment costs for G Company, which he then believed to be the subject of a verbal agreement between them:8.The Respondent Husband was informed by the [proposed] 2nd Respondent in around [early] 2023 that they had in fact documented their agreement by way of a written Loan Agreement, executed [in mid] 2015 and witnessed by [Mr H]. The [proposed] 2nd Respondent provided this Agreement to the Respondent Husband [in early] 2023. The Respondent Husband had forgotten about this Loan Agreement, in circumstances whereby it was executed some 8 years ago.9.Despite initially believing the repayment of $465,000 to the [proposed] 2nd Respondent was on account of the [G Company] establishment costs, the Respondent Husband now understands that this repayment was on account of rent owed to the 3rd Respondent. The Respondent Husband “misunderstood” the nature of his agreement with the 2nd and 3rd Respondents.10.Prior to the establishment of [G Company], the Respondent Husband advised the 2nd Respondent that he could not afford to pay half the cost of establishing [G Company] (including fit-out and renovation costs) and half of market rent to the 3rd Respondent.11.The Respondent Husband and the 2nd and 3rd Respondent estimated the commercial rent for the [D Street Property] as a [business with mixed use rooms] and car parking, would be approximately $140,000 per annum.12.In assisting the Respondent Husband to proceed with the establishment of [G Company], it was privately and verbally agreed the [proposed] 3rd Respondent would initially and outwardly charge the sum of only $20,000 rent per annum to [G Company], with payment of the Respondent Husband’s half‑share of the remaining estimated market rent to be postponed until such time as he could afford to pay same.13.Following the establishment of [G Company], the [proposed] 2nd and 3rd Respondent afforded the Respondent Husband ongoing credit for his half‑share of the remaining market rent.14.Following the breakdown of the marriage between the Applicant Wife and the Respondent Husband, the [proposed] 2nd Respondent requested that the loan owed to him by the Respondent Husband be repaid in its entirety.15.The debt to the [proposed] 2nd and 3rd Respondents was thereafter discharged in full between […] August 2022 and […] September 2022.
Evidence
Evidence Before The Court
In Quincey & Quincey [2024] FedCFamC1A 30 at [28], Tree J referred to Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 296–297, where Dawson J said:It is, of course, the purpose of pleadings to define the issues between the parties so that they may know the case which they have to meet and in order that the proceedings upon trial may be conducted in an orderly fashion by reference to those issues. The defined issues provide the basis upon which evidence may be ruled admissible or inadmissible upon the ground of relevance. But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings. It is incumbent upon the trial judge to see that the pleadings or particulars are amended so that the record reflects the proceedings as they have been conducted, but his failure to do so will not result in the invalidity of those proceedings: Dare v Pulham (1982) 148 CLR 658 at 664; Water Board v Moustakas (1988) 62 ALJR 209 at 211; 77 ALR 193 at 197; Leotta v Public Transport Commission (NSW) (1976) 50 ALR 666 at 668; 9 ALR 437 at 446; Maloney v Commissioner for Railways (NSW) (1978) ALJR 292 at 295; 18 ALR 147 at 151.(Emphasis added by Tree J) Tree J continued at [29]:Both before and after that decision, many other cases have stated identical principles, of which Prysmian Cavi E Sistemi SRL v Australian Competition and Consumer Commission [2018] FCAFC 30 at [69]–[73] (adopting Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133 at [50]–[52]) is but one example. See also Jordan & Sutton (No 2) [2022] FedCFamC1F 850 at [78], per Harper J and Kayce & Wilda (No 2) [2024] FedCFamC1F 405 at [18] – [21]. More recently, in Lund & Whittall [2024] FedCFamC1F 271 at [33], Berman J said:33This Court does not rely upon or require pleadings. It is permissible to gain an understanding of the nature and extent of the claim and the particulars of the claim from documents properly identified. In this regard, the substantial affidavit material and written submission documents seeks to set out the parameters of the applicant’s claim. It is not for me to determine to finality the orders sought by the applicant against the second respondent unless I am satisfied that they are so lacking in any merit that they would not be able to resist an application for summary dismissal. Berman J referred at [31] to Trawl Industries of Australia Pty Ltd v Effem Food Pty Ltd [1992] FCA 377; (1992) 108 ALR 335 at 347, where Gummow J said:However, as indicated above, for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form. This reflects the constitutional basis of federal jurisdiction, to which I have referred earlier in these reasons. Also, it allows for the very many controversies which now come before superior courts, federal and State, without pleadings. And even where pleadings are necessary or are ordered, the effect of the Judicature system of pleading, now in general operation in Australia, is as described by Barwick C.J.:"(T)here is no necessity to assert or identify a legal category of action…It is sufficient in matters in the Federal Court to assert the facts on which the plaintiff or applicant party relies and to nominate the remedies which he seeks as a consequence of the occurrence of those facts."(Philip Morris Incorporated v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 at 473).
Decision
Reasons for decision
If it ultimately transpires that the husband and his brother are correct in this respect, the remedy, especially in the case of the brother, may lie in an application for costs against the wife. Indeed, it will be recalled that their opposition to joinder of the brother, for the purposes of the s 106B application, is founded, in part, upon their submission that the application is unnecessary because there will be sufficient remaining funds available against which to adjust for the Payment, if founded to have been improperly made. On the husband’s case, the wife will retain and receive property, the net value of which will total several millions of dollars. Therefore, there is no appreciable risk that, if the wife is unsuccessful, she will be unable to meet any order for costs that may be made in favour of the brother. CONCLUSION Accordingly, I shall order that the brother be joined as a second respondent but shall dismiss the joinder application insofar as it seeks the joinder of C Pty Ltd. Further, I shall order that the wife’s statement of claim be struck out and that, within 28 days, she file and serve points of claim in support of the relief sought by her against the brother pursuant to s 106B of the Act, in paragraph 3 of her further amended Initiating Application, and in relation to D Street, in paragraph 13 thereof. I shall otherwise adjourn the balance of the wife’s Application in a Proceeding to a Senior Judicial Registrar on a date to be fixed for determination, insofar as the relief sought therein is within their delegated powers, and otherwise for case management and, if necessary, relisting before me. Given the joinder of the brother, who is the sole director and shareholder of C Pty Ltd, in respect of which the joinder application has been unsuccessful, any application for costs, whether by the wife against the brother (in respect of her successful application to join him) or by C Pty Ltd against the wife (in respect of her unsuccessful application to join it), can await the finalisation of this proceeding.
Ratio Decidendi
Legal Principle Established
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