Shala & Shala (No 2) [2025] FedCFamC1F 814 (12 November 2025)

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.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Shala & Shala has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

1. These reasons explain the dismissal of an application to review the decision made by a senior judicial registrar ("the registrar") on 6 November 2025 in these ongoing financial proceedings.

1. The parties married in 2014.
2. On and after the date of their marriage, the parties executed multiple agreements purporting to divide their property between them.
3. Recently, it was determined that none of those agreements was either a financial agreement or binding financial agreement within the meaning of Pt VIIIA of the Family Law Act 1975 (Cth) ("the Act") (Shala & Shala [2025] FedCFamC1F 639) and so the wife now prosecutes a claim for financial relief against the husband under Pt VIII of the Act.
4. In October 2025, the wife filed an Application in a Proceeding seeking to join a mortgagee bank to the proceedings as the second respondent. Subject to the bank's joinder, the wife also sought a retinue of procedural orders.
5. The bank filed a Response, resisting the application, because it enjoys the benefit of a judgment pronounced in its favour in early 2025 by the Supreme Court of NSW granting, first, exclusive possession of the parcel of real property over which it holds the first registered mortgage ("the property"), and second, default judgment against the husband for the money due under the terms of the mortgage in the sum of $464,982.59, exclusive of any accrued interest. The NSW judgment in respect of the property operates in rem, which judgment the parties accept is readily capable of registration in Tasmania to permit enforcement by the issue of a writ of possession.
6. The interlocutory dispute was entertained by the registrar, who dismissed the joinder application and reserved costs on 6 November 2025. Relevantly, these orders were made:
   1. The application by the [wife] to join the [bank] as the Second Respondent to the proceedings is dismissed.
   2. No later than 4.00pm on 20 November 2025 the [bank] must file and serve written submissions and an affidavit in respect to any costs orders it seeks in respect to the [wife's] joinder application, that affidavit to include precise particulars as to those costs.
   3. No later than 4.00pm on 27 November 2025 of these orders the [wife] must file and serve written submissions and an affidavit in respect to any costs orders sought by [the bank] against her.
   4. The costs application of [the bank] against the [wife] is adjourned to a Chambers hearing before [the registrar] on 2 December 2025 at 4.00pm, with no requirement for appearances.
   5. The Application in a Proceeding filed by the [wife] on 6 October 2025 is otherwise dismissed.
7. On 7 November 2025, the wife filed an Application for Review, seeking revision of those five orders. In place of those orders, the wife seeks only this order:
   1. The [bank] is joined as the second respondent to these proceeding.
8. The review application entails a de novo hearing of the wife's application to join the bank as a party to the proceedings (r 14.07(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("the Rules")).
9. In support of the application, the wife relies upon:

(a) her affidavit filed on 6 October 2025;

(b) her Outline of Case document filed on 30 October 2025; and

(c) the terms of her Second Amended Initiating Application filed on 7 November 2025.

1. In rebuttal of the application, the bank relies upon:

(a) the two affidavits of its solicitor dated 30 and 31 October 2025; and

(b) its Outline of Case document filed on 3 November 2025.

1. Persons and entities whose rights may be affected by relief sought in proceedings should necessarily be joined as a party to the cause (r 3.01), which obligation of joinder ensures the provision of procedural fairness.
2. Joinder is achieved by such persons and entities being named in, and served with, the initiating process (r 3.03). Parties may be added after the proceedings have been commenced (r 3.03(2)), but only subject to the fulfilment of certain conditions (rr 3.03(3), 3.03(4) and 3.03(5)).
3. The wife needs leave to join the bank at this advanced stage of the proceedings (r 3.03(4)).
4. It is difficult to conceive an instance where a party who has a genuine interest in the outcome of litigation would not be joined, even over his, her or its objection, for otherwise the prospective party would be denied the opportunity to be heard in respect of the issues and the orders by which he, she or it would be affected. If joined, but the party then elects not to participate, there can be no claim afterwards of the denial of procedural fairness.
5. There is some room for argument about whether the joinder of a "necessary party" is obligatory or discretionary (Jordan & Sutton (No 2) [2022] FedCFamC1F 850 at [38]-[69]), but there is no need to engage that debate presently because the outcome of this review pivots on the question of whether the bank is properly characterised as a "necessary party".

1. In this instance, the bank contends it is not a "necessary party" to the proceedings for two reasons: first, no order is sought against the bank; and second, even if an order is sought against the bank, it enjoys the benefit of the existing judgment of the Supreme Court of NSW which cannot be upset in, or impinged by, these proceedings.
2. The wife and the bank reached an accommodation in September 2025, to the effect the bank would forebear from executing its judgment over the property until March 2026. The only purpose of granting the wife such reprieve is to allow her time within which to refinance the mortgage and satisfy the bank's judgment debt. However, such private arrangement does not prevent the bank from immediately proceeding with enforcement action by obtaining a writ of possession over the property, provided it stops short of selling the property before the due date in March 2026 agreed with the wife. The bank's current disinclination to immediately register the judgment in Tasmania and to formally procure a writ of possession cannot logically place it in a more precarious position.
3. If the wife can satisfy the bank's judgment against the husband, the bank would relinquish possession of the property, as its financial interest in the property would then be extinguished. While the property would still then be owned by the husband, it could at least then be repatriated to the pool of property available for division between the spouses in the financial cause. However, as the bank correctly contends, for the wife to achieve that outcome, there is no need for it to be joined as a party to the proceedings between the spouses.
4. Since the hearing before the registrar, the wife has amended her claims for relief under the Act. Relevantly for present purposes, the wife seeks these orders:
   1. The [husband] do all things necessary to transfer to the [wife] all of his right, title and interest in the [property] in the State of Tasmania, and the [wife] do all things necessary to discharge or refinance into the name of the [wife] the loan secured by mortgage over the [property].
   2. For the purpose of Order 4, the loan is taken to include all amounts owed by the [husband] to the [bank] under the loan agreement secured by mortgage against the [property].
5. Clearly enough, those orders are sought only as in personam orders binding the spouses. The proposed orders would not and could not bind the bank. No claim for relief directly against the bank is either sought or foreshadowed.
6. There are obvious obstacles to the wife obtaining orders in the form of those she seeks.
7. First, an order compelling the husband to transfer his right, title and interest in the property to the wife cannot be granted. The husband no longer has indefeasible title in the property to convey, as his title is subject to the rights of the bank under the mortgage (s 40 and s 42 of the Land Titles Act 1980 (Tas)). With the bank having already foreclosed on the mortgage, the husband only now has an equity of redemption in the property. The bank is empowered by both the terms of the mortgage and by statute (ss 22, 23, 24 and 27 of the Conveyancing and Law of Property Act 1884 (Tas)) to sell the property to satisfy its judgment debt and recover associated costs, carrying an obligation to account to the husband for the net sale proceeds. The husband could be ordered, as part of the property settlement between the spouses, to forfeit to the wife any residue sale proceeds he receives from the bank, but the wife wants the property in specie, not the residue sale proceeds. The bank need not be joined if the wife would be satisfied by her receipt of merely the residue sale proceeds.
8. Second, even if the wife contemplated seeking an order against the bank under Pt VIIIAA of the Act, none could be made. While the provisions of Pt VIIIAA of the Act do empower the Court to make orders and injunctions binding third parties, it is only in confined circumstances and usually not if the order or injunction would diminish a creditor's ability to recover a debt (Commissioner of Taxation v Tomaras [2018] HCA 62; (2018) 265 CLR 434 at [32], [63], [72] and [79]-[90]). Moreover, the power under Pt VIIIAA of the Act only extends to enable orders to govern the spouses' private contractual rights with third parties, not to ride roughshod over the orders already made by another superior court to adjudicate the contractual rights between the spouses and the third party. Here, the Supreme Court of NSW has already pronounced judgment in favour of the bank in relation to all legal rights pertaining to the property, as between the bank and the husband as the sole legal owner, which judgment must be respected (Colburn & Cleese [2022] FedCFamC1A 147; (2022) FLC 94-105 at [20]-[42]). This Court has no right to interfere with the undisturbed judgment of the Supreme Court of NSW by making inconsistent orders. The wife's joinder application proceeds from the mistaken assumption this Court can now disregard the estoppel created by the judgment.
9. The wife's only prospect of recovering the property in specie is to: somehow find the money to satisfy the existing judgment debt by March 2026, upon which the bank would then relinquish possession of the property to the husband as the registered legal proprietor; obtain an interlocutory injunction against the husband giving her exclusive occupation of the property and excluding him from it; and then demonstrating at trial how her sole ownership of the encumbered property as part of the overall division of property between the spouses is just and equitable.
10. The bank is not a necessary party to the proceedings between the spouses. There is no need for it to be joined. The review application is dismissed. The registrar's orders stand.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Austin.