Property Settlement Proceedings Delayed as Court Orders Wife to Amend Application for Joinder

Malallis & Malallis (No 2) [2022] FedCFamC1F 935 (2 December 2022)

Facts:

The wife applied to join several third parties to her proceedings against her husband regarding property settlement.  The court determined that the wife's initial application did not provide a sufficient jurisdictional basis/cause of action for the joinder, and ordered her to file an amended application and statement of claim.  The wife filed the required documents late due to issues with obtaining litigation funding.  In her Further Amended Initiating Application, the wife sought several orders against the proposed third parties, including setting aside a mortgage loan and obtaining a capital distribution.

All orders were opposed by the husband and the proposed third parties.  The final hearing, which was scheduled for 5 days, was adjourned to a later date.  The husband's solicitor filed an affidavit on October 21, 2022, claiming that the wife's statement of claim was insufficient and embarrassing and could not support her amended application filed on September 26, 2022.  At the hearing, Mr. Gallichio argued that the issue was one of procedural fairness because the husband and proposed third parties could not adequately prepare their case unless the statement of claim set out in sufficient detail the case against them.

The wife's counsel argued that the standard for refusing an application for joinder is similar to that of an application for strike out.

Issue:

Whether the husband's application to join third parties in a family law dispute should be granted or not, based on the sufficiency of the wife's statement of claim and the procedural fairness for all parties involved.

Applicable law:

Analysis:

The wife discovered a registered mortgage on a property that belonged to the husband which reduced the equity of the property.  She seeks orders to include the property in any distribution to her, and her counsel argued that the loan was an attempt to cause the wife to pay her own spousal maintenance by depleting a capital asset of the marriage.  The husband claimed that he took the loan to meet his obligations under court orders.  The wife seeks to set aside the instrument, and there is a prima facie case that the conditions for making an order are satisfied.  The husband effectively reduced the asset pool of the parties by entering into the loan agreement with his mother, which reduced the equity of the property.

The wife argues that the husband has legal and de facto control over the trust and that the trust is effectively an object of the marriage.  The wife is seeking an order against the husband and others, with respect to the assets held by the trust, which are valued at approximately $50 million.  The wife has given evidence of distributions from the trust, which she argues shows the husband's ability to freely exercise discretionary power over the trust.  The husband's solicitor argues that the husband does not have complete legal control over the trust and does not have a right to receive trust property.  The solicitor for proposed third parties argues that the wife's case is not adequately pled and that the husband's control over the trust is insufficiently proven.

Conclusion:

The parties involved are required to provide financial disclosures and documentation upon request, and to notify the wife of any proposed sales of an entity.  Additionally, certain paragraphs of the statement of claim filed by the wife have been struck out.  The parties are required to file a response to the further amended initiating application and an affidavit (or affidavits) by January 20, 2023. A final hearing is scheduled for October 30, 2023, with a case management hearing scheduled for February 22, 2023.  The costs of the application are reserved, which means that they will be determined at a later stage in the proceedings.

#Joinder

Case:Malallis & Malallis (No 2) [2022] FedCFamC1F 935

Judgment of: MCNAB J

Counsels: 

Counsel for the Applicant: Mr Puckey KC

Solicitor for the Applicant: Lander & Rogers

Solicitor for the Respondent: Francis V Gallichio Lawyers

Counsel for the Proposed Third Parties Mr North KC