Younes v Younes

These proceedings were commenced by the plaintiff, Ms Lolita Younes, on 13 February 2023. The defendants are Ms Susie Younes and Mr George Younes. I shall refer to these proceedings as the 2023 proceedings to distinguish them from other proceedings referred to in these reasons. For clarity, and without intending any disrespect, I will refer to all of the parties to the 2023 proceedings by their first names.

Susie and George were married and have been separated since 2015.

Lolita is George’s sister.

On 24 February 2017, Susie commenced proceedings for adjustive property orders under s 79 of the Family Law Act 1975 (Cth) in the court that was then the Family Court of Australia. From 1 September 2021, that court continued in existence as the Federal Circuit and Family Court of Australia (Division 1) and the proceedings commenced by Susie were taken to be proceedings in the Federal Circuit and Family Court of Australia (Division 1). [1] I will refer to those proceedings as the family law proceedings.

Lolita is not a party to the family law proceedings.

Although they were commenced more than six years ago, the family law proceedings have not yet been listed for final hearing.

In 2018, Lolita commenced proceeding 2018/64647 in this Court against Susie and George as the first and second defendants respectively (the 2018 proceedings).

The 2018 proceedings arose out of a joint venture allegedly entered into between Lolita, Susie and George in about 1998 for the purchase and development of townhouses on land at 26 Page Street, Wentworthville (the Page Street property). Watts McCray, solicitors, represented Susie in the 2018 proceedings, including at the mediation and settlement negotiations referred to below.

In January 2020, Lolita, Susie and George entered into a Heads of Agreement recording the terms on which they agreed to settle the 2018 proceedings. The Heads of Agreement are undated, but there is no dispute that the document was executed on or about 24 January 2020 following a mediation that was conducted on 20 January 2020. Nothing turns on the precise date of execution.

The Recitals to the Heads of Agreement record:

Clause 1(a) of the Heads of Agreement provides:

Clause 1(b) of the Heads of Agreement provides that the parties will enter into a more formal Deed of Settlement and Release to document the precise terms of their agreement. There is no evidence that any such formal deed was entered into, but no party contends that the Heads of Agreement is not binding for that reason. Clause 2 of the Heads of Agreement records the parties’ acknowledgement that it is “immediately binding and enforceable notwithstanding that the parties have agreed the terms of this agreement will be restated in a more fulsome and precise deed”.

Clause 1(c) of the Heads of Agreement sets out terms that the parties agreed would be included in the formal deed that they intended to enter into at the time the Heads of Agreement was executed. Those terms include terms to the following effect:

Clause 3.1 of the Heads of Agreement stipulates the law of New South Wales as the governing law of the Heads of Agreement. Clause 3.2 provides:

Clause 4 of the Heads of Agreement provides:

During the period after the parties entered into the Heads of Agreement in January 2020 until about mid-2022, the parties took steps to carry out the subdivision of the Page Street property as referred to in the Heads of Agreement. Lolita arranged and paid for certain works, and Susie allowed access to the Page Street property in order for those works to be carried out. In about June 2022, Susie and George executed some (but not all) documents required to give effect to the subdivision.

On 21 July 2022, solicitors acting for Lolita in relation to the Heads of Agreement wrote to George and Susie stating that they were in breach of the Heads of Agreement because George was yet to undertake certain construction works that were required for occupation certificates to be issued for the duplexes and the title to 36/2 Page Street was yet to be transferred to Lolita. The letter stated that the Heads of Agreement had been “embodied” in orders made by this Court in the 2018 proceedings and that Lolita intended to “enliven” the 2018 proceedings in order to enforce the Heads of Agreement. I infer that this statement was, in substance, foreshadowing an application under s 73 of the Civil Procedure Act 2005 (NSW) which confers jurisdiction on this Court to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them and to make such orders as it considers appropriate to give effect to any such determination. The letter continued:

As at 21 July 2022, neither Susie nor George had raised any issue concerning the Heads of Agreement in the family law proceedings. Susie had filed an application in the family law proceedings on 11 April 2022 seeking to join Lolita and numerous other persons and entities as respondents to those proceedings. Insofar as it concerned Lolita, that application was based on George having been removed and Lolita having been appointed in his place as the appointer of various trusts. That application been dismissed on 14 June 2022 after Lolita gave certain undertakings to the Federal Circuit and Family Court of Australia to refrain from amending the trust deeds for the relevant trusts, removing directors of the corporate trustees of those trusts, or removing the trustees or changing the appointors of those trusts, other than in the ordinary course of business without giving 28 days prior written notice of her intention to do so.

Susie did not respond to the 21 July 2022 letter from Lolita’s solicitors referred to above.

On 7 October 2022, Susie purportedly amended her application in the family law proceedings that had been dismissed on 14 June 2022. The purported amendments re-agitated an application to join Lolita as a respondent to the family law proceedings. Although the amended application did not identify any new basis for joining Lolita as a respondent to the family law proceedings, it was filed one day after Susie filed points of claim on 6 October 2022 that raised for the first time in the family law proceedings issues concerning the Heads of Agreement. Insofar as they related to the Heads of Agreement, those amended points of claim stated:

As mentioned earlier in these reasons, Susie seeks adjustive property orders under s 79 of the Family Law Act in the family law proceedings. Section 79 relevantly provides:

Section 106B, referred to in paragraph 248 of the points of claim above, is in Part XIII of the Family Law Act and relevantly provides:

On 11 November 2022, Lolita’s solicitors wrote to Susie’s solicitors complaining that both the purported amended joinder application and the points of claim had been filed without the leave of the Federal Circuit and Family Court of Australia. In relation to the points of claim, the letter stated:

Susie’s amended application filed on 7 October 2022 to join Lolita (and numerous other persons and entities) to the family law proceedings was listed for hearing in Federal Circuit and Family Court of Australia on 16 November 2022. The evidence before this Court in the 2023 proceedings does not disclose how that came about, in circumstances where the application was apparently filed without leave and purported to amend an earlier application that had already been dismissed. In any event, the hearing of that joinder application was adjourned on 16 November 2022 to 27 January 2023 at the request of Susie’s legal representatives.

On 7 December 2022, Susie filed an amended points of claim in the family law proceedings. Notwithstanding the matters raised in the letter sent by Lolita’s solicitors to Susie’s solicitors on 11 November 2022, the amendments made no change to paragraphs 241 to 249 of the points of claim filed on 6 October 2022.

The amended points of claim document states that it was filed pursuant to orders made by the Federal Circuit and Family Court of Australia on 16 November 2022. There is no evidence before this Court of the terms or substance of those orders made on 16 November 2022 and it is not clear whether they included an order granting leave to Susie to file and rely on the amended points of claim in the family law proceedings, notwithstanding that the Federal Circuit and Family Court of Australia is yet to determine Susie’s application to join as respondents to the family law proceedings many of the persons and entities whose interests would be affected by the orders sought in the amended points of claim, if those orders were ultimately made. Relevantly, Lolita’s interests would be affected by the order under s 106B of the Family Law Act sought in paragraph 248 of the amended points of claim.

On 25 January 2023, Lolita’s solicitors wrote to Susie’s solicitors referring to Susie’s amended joinder application filed on 7 October 2022, the orders made on 16 November 2022, the amended points of claim filed on 7 December 2022 and an affidavit made by Susie on 14 December 2022 in the family law proceedings.

The letter identified that Susie’s application to join Lolita as a respondent to the family law proceedings appeared to be made on two bases:

The first apparent basis referred to above is not relevant for present purposes and it is therefore not necessary to refer to the evidence of the parties’ correspondence concerning that first basis.

In relation to the second apparent basis, the Lolita’s solicitors wrote:

The letter continued:

The hearing of Susie’s amended joinder application in the family law proceedings did not proceed on 27 January 2023 by reason of an application that had been filed by George in those proceedings on 24 January 2023 seeking orders that Susie not be permitted to rely on certain allegedly privileged documents and orders restraining her solicitors from continuing to act for her in the family law proceedings. There is no suggestion that any act or omission of Lolita caused or contributed to that adjournment.

The family law proceedings are presently listed for directions in the Federal Circuit and Family Court of Australia on 5 May 2023. Susie’s amended joinder application has not been allocated a new hearing date and there is no evidence before this Court about when that application is likely to be heard and determined.

Lolita commenced the 2023 proceedings by filing a statement of claim on 13 February 2023 seeking:

Neither Susie nor George have filed a defence in the 2023 proceedings.

Susie filed a notice of appearance on 21 February 2023. Susie’s solicitors wrote to Lolita’s solicitors on the same day, inviting Lolita to consent to the 2023 proceedings being transferred to the Federal Circuit and Family Court of Australia to be joined with the family law proceedings.

Lolita’s solicitors replied on 28 February 2023 stating that Lolita was not a party to the family law proceedings, despite applications to join her as a respondent having been listed for hearing before the Federal Circuit and Family Court of Australia on three occasions.

Susie’s solicitors wrote to Lolita’s solicitors on 8 March 2023, advising that they were drafting an application to seek orders transferring the 2023 proceedings to the Federal Circuit and Family Court of Australia. Lolita’s solicitors replied on 14 March 2023 advising that Lolita did not consent to the transfer of the 2023 proceedings.

On 9 March 2023, the Federal Circuit and Family Court of Australia dismissed the applications that had been filed by George on 24 January 2023, as referred to at [32] above.

At the first directions hearing in the 2023 proceedings on 17 March 2023, this Court made orders granting leave to Susie to file and serve any notice of motion concerning the proper progress of the 2023 proceedings in light of the ongoing family law proceedings by 31 March 2023, and directing that any such notice of motion be returnable in the Real Property List on 21 April 2023 for hearing.

On 29 March 2023, Susie filed an application in the family law proceedings for an order that Lolita be restrained from further prosecuting the 2023 proceedings in this Court and for an order joining Lolita as respondent to the family law proceedings “forthwith”. The evidence before this Court is silent as to the present status of that application.

On 31 March 2023, Susie filed a notice of motion filed in the 2023 proceedings in accordance with the orders made on 17 March 2023. The notice of motion seeks orders that the 2023 proceedings be stayed:

That motion, which I will refer to as the stay application, was heard before me on 21 April 2023. Mr Ford of counsel appeared for Susie. Ms Horvath of senior counsel appeared for Lolita. There was no appearance for George, who did not seek to be heard on the stay application and has reserved his position as to whether he will file a defence to the statement of claim or file a submitting appearance in the 2023 proceedings. Further written submissions in relation to the stay application were filed (with leave) on 24 April 2023 on behalf of Susie and on and 26 April 2023 on behalf of Lolita.

Having considered all of the parties’ written and oral submissions, I have concluded that the stay application should be dismissed. I will endeavour to explain my reasons as briefly as possible.

The submissions made on behalf of Susie identified two bases for the orders sought in the stay application.

The first basis was Susie’s contention that the 2023 proceedings are an abuse of the process of this Court because, if Lolita is joined as a respondent to the family law proceedings, then there will be two concurrent proceedings on foot concerning the validity of the Heads of Agreement. It was submitted that this would be contrary to the public interest in the administration of justice because there would be a risk of inconsistent findings in the two proceedings in that scenario. It was submitted that the 2023 proceedings should therefore be stayed pending the determination of Susie’s amended joinder application and her other application filed in the family law proceedings on 29 March 2023. It was further submitted that Lolita should have awaited the determination of the amended joinder application in the family law proceedings before taking any step to commence the 2023 proceedings, emphasising that the amended joinder application had been filed four months before Lolita commenced the 2023 proceedings. Counsel for Susie conceded that there will be no basis to stay the 2023 proceedings if Lolita is not joined as a respondent to the family law proceedings.

Susie’s submission that there will be an overlap of issues and risk of inconsistent findings between the 2023 proceedings and the family law proceedings if Lolita is joined to family law proceedings relied solely on paragraphs 241 to 249 of Susie’s amended points of claim in the family law proceedings referred to at [20] and [25] above. It is convenient to refer to those claims as the nefarious intent claims.

The 2023 proceedings are a suit for the specific performance of an agreement governed by the law of New South Wales in relation to real property in New South Wales. The proceedings are plainly within the jurisdiction of this Court, and the parties expressly agreed to submit to the exclusive jurisdiction on this Court. Unless and until Lolita is joined as respondent to the family law proceedings, so as to facilitate the Federal Circuit and Family Court of Australia entertaining the nefarious intent claims, it cannot be said in any meaningful sense that there is a duplicity of proceedings concerning the validity of the Heads of Agreement or that there is any risk of inconsistent findings being made in the 2023 proceedings and the family law proceedings. That is because, if the Federal Circuit and Family Court of Australia were to make an order setting aside the Heads of Agreement at law or pursuant to s 106B of the Family Law Act without joining Lolita as a respondent to the family law proceedings, Lolita would be entitled to have that order set aside as a matter of right. [2]

In my opinion, it was not an abuse of the process of this Court for Lolita to commence the 2023 proceedings on 13 February 2023 in circumstances where:

The submission made on behalf of Susie that Lolita “should” have waited until after Susie’s amended joinder application was determined in the family law proceedings before taking any step to commence the 2023 proceedings, is without merit for all of those reasons above, and for the following additional reasons.

Whilst, the question whether Lolita should be joined as a respondent to the family law proceedings for the purpose of Susie’s nefarious intent claims is plainly a matter for the Federal Circuit and Family Court of Australia to determine, I accept the submissions made by senior counsel for Lolita that the evidence adduced before this Court at the hearing of the stay application does not reveal a proper basis for joinder because it does not reveal a proper basis for the nefarious intent claims, including the very serious allegation against Lolita that is wrapped up in those claims.

As I have stated above, paragraphs 241 to 249 of the points of claim as presently drafted do not serve the essential function of pleadings, at least so far as Lolita is concerned. The nefarious intent claims do not rise above a bare assertion of undue influence and duress on the part of George (not Lolita) and do not plead a single material fact relied on in support of the assertion that George, the third respondent to the family law proceedings, and Lolita held and concealed an alleged mutual “nefarious intent in seeking to remove assets from the matrimonial pool from the period between 1 December 2015 and 2017”. Susie took no steps to clarify any of those matters when she amended the points of claim, despite being invited to do so by Lolita’s solicitors on 11 November 2022, as referred to at [23] above.

At the hearing of the stay applications before this Court, Susie did not seek to adduce any evidence capable of elevating the nefarious intent claims above the bare assertions referred to above. Rather, counsel for Susie submitted that she had discovered “at least two” documents on a home computer at some unspecified time between 11 April and 7 October 2022 that had “raised her suspicions regarding what we have termed the nefarious conduct between various parties in that jurisdiction. That conduct … is conduct, in my submission, that is designed to defeat the jurisdiction of the Family Court, or now the Fed Circuit and Family Court of Australia”. Although counsel for Susie informed the Court that the Federal Circuit and Family Court of Australia had determined on 9 March 2023 that those documents were not the subject of legal professional privilege, the documents were not tendered at the hearing of the stay application. The submissions do not provide a basis for this Court, in determining the stay application, to infer that there is a proper basis for the joinder of Lolita as a respondent to the family law proceedings in connection with the nefarious intent claims.

On the contrary, having regard to the terms of the Heads of Agreement and the other evidence adduced before this Court at the hearing of the stay application, it is difficult to comprehend how the alleged nefarious intent with respect to transactions between December 2015 and 2017 (if established) would be capable of affecting Susie’s consent to the Heads of Agreement, as asserted in the amended points of claim. The Heads of Agreement expressly identified the effect of the parties’ agreement on the matrimonial pool of assets. I refer in particular to clauses 1(c)(ii), (vi) and (vii), which are set out at [13] above. As counsel for Susie acknowledged at the hearing of the stay application, it was obvious from those clauses that the Heads of Agreement would have the effect of excluding 36/2 Page Street from the pool or potential pool of matrimonial assets that was (and remains) in issue in the family law proceedings, which had been commenced almost three years before the Heads of Agreement was executed. It was not submitted that Susie did not understand that at the time she entered into the Heads of Agreement. Nor was it submitted that she executed the Heads of Agreement without the benefit of legal advice. As referred to at [8] above, Susie was advised by Watts McCray throughout the 2018 proceedings and the negotiation of the Heads of Agreement.

Forum non conveniens is the second basis of Susie’s stay application. As a result of the substantial overlap between the matters relied on by Susie in support of the abuse of process basis and the forum non conveniens basis, the substance of the second basis has already been addressed above. Applying well established principles to the circumstances of this case, this Court is not forum non conveniens for the reasons there explained. [3]

Senior counsel for Lolita emphasised that she does not seek by commencing the 2023 proceedings to shut Susie out of prosecuting any properly pleaded claim to set aside the Heads of Agreement, including a claim under s 106B of the Family Law Act. It was submitted that such a claim could be pleaded as a defence, or defensive cross-claim, to the statement of claim in the 2023 proceedings. I accept the submission made by counsel for Susie that it is doubtful that this Court would have jurisdiction to entertain a s 106B defence or cross-claim in the 2023 proceedings, unless the family law proceedings were transferred to this Court. The doubt arises because the power to set aside instruments or dispositions under s 106B of the Family Law Act is exercisable “[i]n proceedings under this Act”. Although s 4(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) confers jurisdiction on this Court with respect to family law proceedings, [4] the 2023 proceedings are not proceedings under the Family Law Act and this Court will not be exercising jurisdiction under that Act unless the family law proceedings are transferred to this Court.

That doubt was raised by Brereton J (as his Honour then was) in In the matter of PJL Group Pty Ltd [2018] NSWSC 756 at [24]. Although it is not necessary for me to determine the question for the purpose of determining the stay application, I respectfully consider that the doubt is well-founded, notwithstanding that it had not been identified in those terms in his Honour’s earlier judgment in Elias & Elias Pty Ltd atf the Elias Family Trust v Chidiac [2010] NSWSC 1364. However, his Honour had identified in that case other difficulties that would be involved in permitting a defendant to proceedings in this Court to propound at s 106B claim seeking to set aside a disposition or instrument that the plaintiff sought to enforce in this Court, in circumstances where the relevant proceedings under the Family Law Act were pending before the Family Court of Australia. His Honour said (at [21]):

Shortly before Brereton J concluded his deliberations concerning the finely balanced alternatives in that case of transferring the Supreme Court proceedings to the Family Court or transferring the Family Court proceedings to the Supreme Court, the Family Court of Australia made an order for the transfer to that Court of the proceedings that had been commenced in the Supreme Court. His Honour’s reasons for judgment were published to explain the circumstances in which the second defendant’s motion filed in the Supreme Court proceedings for the transfer of those proceedings to the Family Court was dismissed and to determine the costs of that motion. [5]

Both bases of Susie’s stay application have failed for the reasons explained above and orders will be made dismissing the notice of motion filed on 31 March 2023. I am not aware of any reasons why costs should not follow the event, but I will hear the parties in relation to costs.

It is plain from correspondence that was tendered at the hearing of the stay application that, if Lolita is joined as a party to the family law proceedings, Susie is likely to apply for the 2023 proceedings to be transferred to the Federal Circuit and Family Court and Lolita is likely to apply for the family law proceedings to be transferred to this Court. In the meantime, Susie and George will be required to file any defence and cross-claims to Lolita’s claims in the 2023 proceedings. That work will be required, irrespective of the outcome of any transfer applications. Indeed, the substance of any defences may be relevant to determining any such transfer applications in accordance with established principles. [6]

For all of the reasons above, the order of the Court is as follows: