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Bhanot & Bhanot

[2020] FCCA 2015


This is an ex tempore ruling regarding the property settlement of a couple. The wife claims that the sale of her husband’s business to his brother is a sham and therefore, there is a clear necessity for the addition of the brother to the proceedings. The couple also wants the Court to determine which property should be sold to provide interim funds.


Facts: Mr. Bhanot owns all 10 shares in an entity known as F Group Pty Ltd. F Group Pty Ltd owns three properties including one at D Street, Suburb E. After separating from his wife, Mr. Bhanot executed an agreement purporting to sell G Pty Ltd to his brother, Mr. C because it had a debt of $457,000 to Mr. C. Ms. Bhanot filed an application to join Mr. C as a party to the property settlement proceedings. She alleges that the sale agreement was a device to alienate a marital asset. Mr. Bhanot claims that the sale was bona fide. Ms. Bhanot also sought for spousal support from Mr. Bhanot. Both Mr. Bhanot and Ms. Bhanot sought for the sale of property to provide interim funds, however, they do not agree on which property should be sold. Mr. Bhanot wants the matrimonial home to be sold because he can no longer pay the mortgage.


Issue: Is the sale a sham? Should the brother be joined as a party to the proceeding? Should Mr. Bhanot pay for spousal support? Which property should be sold for interim funds?




Federal Circuit Court Rules 2001 Rule 11.01: 

Necessary parties

  1.  Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
  2.  The Court may require a person to be included as a party.
  3.  A person required to be included as an applicant who does not consent to be included may be included as a respondent.
  4. The Court may decide a proceeding even if a person is incorrectly included or not included as a party.


Federal Circuit Court Rules 2001 Rule 11.02: 

Party may include another person as a party

  1. A party to a proceeding may include any person as a party by:
    1. naming the person as a party in the application, response or reply; and
    2. serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
  2.  A party may not include a person as a party after the first court date without the leave of the Court.
  3. The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.


Family Law Act 1975 Section 81

Duty of court to end financial relations

In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.



  • The sale agreement was allegedly entered into in order to get rid of the indebtedness of Mr. Bhanot. However, upon careful reading of the document, it appears that the indebtedness still exists. 
  • Mr. Bhanot is still required to pay the debt although the deadline of payment is not clear. 
  • The subject of the sale was G Pty Ltd, however, it mentions in detail the three properties owned by F Group Pty Ltd including D Street, Suburb E. 
  • The debt of Mr. Bhanot is not actually extinguished but rather purports to be secured against the three properties owned by the F Group Pty Ltd. 
  • The agreement also provides that Mr. C will have complete and full fledged rights charge/lien/pledge/mortgage/caveat over the three properties of F Group Pty Ltd. 
  • On the matter of spousal support, Mr. Bhanot claimed on his oath  that he has no money. His sole source of funds has stopped.
  • With regard to which property should be sold, if the D Street, Suburb E property is sold, there is a surplus of about $180,000. Mr. Bhanot claims that because of the sale agreement, his brother has a caveatable interest in the property. However, money debts do not of themselves, per se, give rise to interests in land and in any event, the Court has the power to order sale and removal of caveats as provided for in section 81D of the Family Law Act. D Street, Suburb E should be sold for interim funds. From the proceeds, Mr. Bhanot and Ms. Bhanot will each receive the sum of $50,000 and the balance will be held on trust for them.


Held: Due to the fact that the sale agreement is actually a document that makes the three properties of the F Pty Ltd a guarantee to the debt of Mr. Bhanot, it is clear that Mr. Bhanot’s brother, Mr. C, is part of the overarching single dispute. It is imperative to enjoin him to the proceedings either pursuant to rule 11.01(2) or rule 11.02.

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