HIS HONOUR: The plaintiff and the defendant were married in India in May 1988. They went through a civil ceremony of marriage in this country in June 1989. They separated in November 1998 and were divorced in November 2001. There has been no order made for a declaration of property rights under s 78 of the Family Law Act 1975 (Cth) nor for adjustment of property rights under s 79 of that Act.
The defendant has now made application out of time in the Family Court of Australia for an order under s 79 of the Family Law Act. By virtue of s 44(3) of that Act, that application not having been made within 12 months after the date on which the divorce order took effect, the application could only be brought with the consent of the plaintiff or otherwise by leave of the Court. In the event, the plaintiff gave her consent, and the application has proceeded in the Family Court, although it has not been heard and decided.
The plaintiff made her own application, for interim maintenance. That application has been heard and decided.
The plaintiff has filed three responses to the defendant's application under s 79. The first version of the response sought relief in relation to a debt said to be owing by the defendant to the plaintiff and in relation to the ownership of a property at Frenchs Forest. The amended response sought essentially the same relief, but in fuller and more appropriate terms. Both of those documents were prepared by lawyers then acting for the plaintiff.
The third response was prepared by the plaintiff herself. She withdrew all the previous prayers for relief and instead sought to have the defendant's application dismissed on various grounds, or transferred to this Court. That appears to have reflected in part the plaintiff's decision, made in June this year, to commence her own proceedings in this Court. It may be noted that in substance the relief claimed by the plaintiff in this Court in her statement of claim (which she herself prepared) was equivalent to the relief claimed by her in her amended answer in the Family Court (the second in the series of three answers to which I have referred).
It has become apparent that the plaintiff's specific grievances arise out of two agreements made between her and the defendant. One is called an agreement to repay debt. It was made in August 2012. Under that agreement, the defendant accepted that he owed the plaintiff $900,000 (including interest), and agreed to repay it at the rate of $10,000 per month. The plaintiff agreed not to seek further interest so long as those monthly payments were maintained. The defendant made those payments for a period of time but has since stopped making them. There is said to be about $520,000 still owing.
The second agreement is called a family agreement. It was made in December 2013. In terms, it confirms "a mutual verbal agreement which dates back to 28 April 2009". It relates to the Frenchs Forest property to which I have referred. That property is the residence of the plaintiff and her children (the children of the marriage). Title to the property is in the name of the defendant. The plaintiff says that it was agreed to be her property and that she has paid outgoings of various kinds. The agreement purports to confirm the various verbal agreements that the parties had made, the clear purport of which is that in due course the plaintiff would get the benefit of title to the property.
It is in respect of that property that the defendant has sought relief in his s 79 application to the Family Court. The relief that he seeks is, in effect, an order that the Frenchs Forest property be sold (under his direction) and that, after payment of all debts, expenses and outgoings, the proceeds be divided, 20 per cent to the plaintiff and 80 per cent to the defendant. The defendant seeks no other relief under s 79.
The defendant's position is that the application as to the Frenchs Forest property is properly within the jurisdiction of the Family Court, because its subject matter is a "matrimonial cause". The defendant relies on para (ca)(i) of that definition:
(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:
(i) arising out of the marital relationship
…
Whilst looking at that definition, I shall set out paragraph (c) also, since it was referred to in submissions put for the defendant:
(c) proceedings between the parties to a marriage with respect to the maintenance of one of the parties to the marriage;
In support of his submission that the property in question was capable of forming the subject of a matrimonial cause, Mr Stapleton of Counsel (for the defendant) referred to the decision of the Full Court of the Family Court (Nicholson CJ, Nygh and Purdy JJ) in In the Marriage of HT and NI Kowalski (1992) 16 Fam LR 235. That was a case where one of the parties sought an order under s 79 many years after the marriage had been dissolved, and in respect of property acquired many years after that dissolution. The Full Court held that the Family Court had jurisdiction. Their Honours said at 243 that once there was a marriage, the entire relationship between the parties, whether arising out of contributions before, during or after the marriage was made or dissolved, fell within Pt VIII of the Family Law Act. Thus, their Honours said:
These parties are before the Family Court because they were once married and hence the proceedings can be said to arise out of the marital relationship, even if the property, the subject of such proceedings, does not.
It followed, their Honours said (still at 243):
Once it is determined that the proceedings fall within para (ca) of the definition of "matrimonial cause" and the whole of the relationship can be taken into consideration including the post-marital cohabitation...the other grounds of appeal...must also fail.
It is clear from what their Honours said that property of either party, whenever acquired ("before, during or after the formal tie of marriage"), falls for consideration under s 79.
Thus, I accept the submission that on the face of things the defendant's application in the Family Court is one within para (ca) of the definition of matrimonial cause.
That conclusion is important, because it leads to the particular issue with which I am concerned today. That issue is the defendant's attempt to stop, one way or another, the plaintiff's case from proceeding further in this Court. Within 28 days after service upon him, the defendant moved under UCPR r 12.11. The relief that he seeks (and he calls in aid also r 13.4) includes an order declaring that the Court has no jurisdiction in respect of the subject matter of the proceedings, or an order declining to exercise jurisdiction, or a stay; or an order for summary dismissal on the basis that the plaintiff's proceedings are an abuse of process.
The plaintiff filed her own notice of motion in opposition. Although it is not entirely easy to attribute content to it, I think it best to treat that document as, in effect, a quasi-pleading in answer to the defendant's notice of motion.
As I have said, the present position is that s 44(3) of the Family Law Act has been satisfied, because of the defendant's consent. It is important to record the steps leading to that consent (although I do not refer to all of the steps on which Mr Stapleton relied).
On 13 July 2015, solicitors then acting for the plaintiff wrote to the defendant. They made the point that the two agreements to which I have referred had problems because they were not binding financial agreements within s 90D of the Family Law Act, and (by implication at least) thus were not enforceable, by virtue of s 90G. The solicitors proposed that a s 90D agreement be made. They provided a draft agreement.
The recitals in that draft agreement made it clear (if it were not otherwise clear) that the matters in dispute between the parties (then and now) do relate to property that is capable of being made the subject of an order under s 79 of the Family Law Act.
After further correspondence, the plaintiff's then solicitors wrote again, noting that the plaintiff "is inclined and interested in resuming the negotiations towards a final resolution of all property issues...". The letter attached a revised draft property settlement agreement (s 90D). The relevant draft recitals were effectively the same.
When the defendant's application came before a Registrar of the Family Court on 17 November 2015, both parties were represented by lawyers. In addition, the plaintiff was present in person. The Registrar's orders among other things noted that "both parties consent to the proceedings for property settlement being commenced out of time pursuant to s 44(3) of the Family Law Act".
When the defendant's application came back before the Family Court, and when both parties were legally represented (by counsel), Le Poer Trench J made a number of orders including the following consent order:
4. By consent, the applicant husband is granted leave pursuant to s 44(3) to commence proceedings for property settlement out of time. The court notes the husband moves on his Initiating Application filed 1 September 2015 which contains the property orders sought if leave is granted.
The plaintiff, by her further amended response in the Family Court, now seeks to withdraw her consent. If she succeeds in doing that (and I express no view whatsoever on her prospects of success, because this is a matter for the Family Court), the defendant will need the leave of that Court to continue with his application. Essentially, having regard to s 44(6) that would require the defendant to demonstrate hardship were he not granted leave. Again, that being peculiarly a matter for the Family Court, I express no view as to his prospects of success were he compelled to make such an application.
It may however be noted that the plaintiff's application in the Family Court for maintenance also required either consent or leave, because it too was made more than 12 months after the divorce order took effect. The defendant granted his consent to the bringing of that application. That no doubt is a factor that the Family Court would consider on the hearing of the plaintiff's applications (and the hypothetical further application of the defendant).
Meanwhile, the position is that there are proceedings in two Courts each of which concerns the same essential subject matter. The proceedings in this Court comprise in substance the plaintiff's attempts to vindicate her rights under the two agreements to which I have referred. The immediate difficulty with vindication of those rights is that if, as I think is the case, those agreements are financial agreements for the purposes of the Family Law Act, then they are ineffective by virtue of s 90G. If that is the case, it is as much an impediment to their enforcement in this Court as it is to their enforcement in the Family Court. The plaintiff's previous solicitors seem to have recognised that problem very clearly. That no doubt is why they proposed the regularisation of the position by the making of a further, binding, financial agreement that would comply with the requirements of s 90G.
At the same time, in the Family Court, the husband seeks relief from what would have been his obligations under those agreements were they legally enforceable. It is not necessary for him to have recourse to the agreements, because the power of that Court is one to affirm or make adjustments to property interests, depending on the section (s 78 or s 79) that is invoked. As I have said, the husband invokes s 79. As I have also said drawing on the reasoning in Kowalski, the property that is the subject of the two agreements (the debt acknowledged to be owing to the plaintiff, and the Frenchs Forest house) comprises property that is amenable to the jurisdiction of the Family Court under s 79.
In those circumstances it is undoubtedly capable of being an abuse of process for the plaintiff to claim the relief that she does in this Court when the same questions are to be agitated in another Court that undoubtedly has jurisdiction to deal with them. Had the plaintiff not withdrawn her amended response, the very matters on which she now relies, and essentially the relief that she now seeks, would have been before the Family Court and no doubt would have been adjudicated upon by a judge of that Court. I do not know why the plaintiff withdrew those claims for relief, but if it were in an attempt to advance her case in this Court, it seems to me to be capable of amounting to a further instance of abuse of process.
The plaintiff submitted that I should not take any of the actions that the defendant seeks. She submitted, further, that I should not cross-vest these proceedings to the Family Court. She submitted that she needed urgent relief, and that she was likely to get it more quickly in this Court than in the Family Court.
I do not know that there is any difference of expedition between this Court and the Family Court. To the extent that the defendant's application in the Family Court is being held up, a real impediment to its progress is the plaintiff's application for leave to withdraw her consent. Had the plaintiff maintained the form of her amended response, all of the disputes between the parties, in relation to all the property that is the subject of the plaintiff's application in this Court, would have been up for argument and resolution in the Family Court. To the extent that there is likely to be delay in the Family Court, the plaintiff, it seems to me, is in a very real sense the author of that delay.
Further, I do not agree with the proposition that the plaintiff's claim in this Court, as presently articulated, is likely to proceed with expedition. I say that because the pleading is in many ways defective, reflecting no doubt the fact that the plaintiff, who has no legal qualifications, drafted it herself. It is all too easy to foresee that in this Court, were the matter to proceed, there would be applications for striking out, cross-applications for amendment, applications for particulars, and all sorts of other difficulties before the real issues were exposed. And then, once those issues were exposed, the plaintiff would have to confront the problem to which I have referred already: namely, what is prima facie the unenforceability of the two agreements.
In those circumstances, it seems to me that there is no utility whatsoever in permitting the plaintiff's claim to proceed in this Court.
That leads to the question, what should be done with her claim? Mr Stapleton submitted that at the very least I should stay it. His broader submission was that I should either dismiss it summarily or, at the very least, decline to exercise jurisdiction. He opposed an order for cross-vesting of these proceedings to the Family Court, on the basis that there would be further expense and delay.
The plaintiff opposed the grant of any relief, essentially for the reasons that I have summarised already.
The real difficulty with the relief sought by Mr Stapleton (apart from the most limited form of relief, namely a stay) is that it would have the effect of deciding finally (in a practical rather than legal sense) the merits of the plaintiff's claim in this Court. It would compel her, I think, to seek leave further to amend her response in the Family Court if her present application, to withdraw her consent, succeeds; or, if that application succeeds, the defendant obtains the leave that he would then need. Thus, I think, the broader relief that Mr Stapleton seeks is of a kind to which McLelland J referred in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533. In those circumstances, I think, the Court should be careful indeed before granting relief which, even if not technically final in form, nonetheless would very seriously prejudice the ability of the plaintiff to maintain her argument.
The question of cross-vesting is ultimately one for the Court to decide, based on the circumstances set out in (in this case) s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) (the Cross-vesting Act):
(1) Where:
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court, and
(b) it appears to the Supreme Court that:
(i) (Repealed)
(ii) having regard to:
(A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court,
(B) the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and
(C) the interests of justice,
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be,
(iii) (Repealed)
the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.
I note that, by subs (7), the Court may make the order of its own motion:
(7) A court may transfer a proceeding under this section on the application of a party to the proceeding, of its own motion or on the application of the Attorney-General of the Commonwealth or of a State or Territory.
Of course, the cross-vesting legislation hit something of a snag, in its application to transfers from State courts to Federal courts, in the form of the decision of the High Court in Re Wakim; Ex parte McNally (1999) 198 CLR 511. The Court held in substance that whilst the Parliament of a State could pass legislation that gives courts of another polity jurisdiction over matters of State law, that law would have no effect unless the reciprocal courts give it effect. Where the reciprocal court is a Chapter 3 court under the Constitution, that directs attention to the concept of "matter" and the nature of original jurisdiction in the Federal courts.
In this case, I think, there can be no Wakim problem. The effect of Wakim is that unless the transferred proceedings do relate to a "matter" in respect of which the transferee (Chapter 3) court would have jurisdiction, the transfer is ineffective. But in this case, for the reasons I have sought to indicate, it is in my view clear that the proposed transferee court - the Family Court - would have jurisdiction. That is because it is clear, in my view, that the plaintiff's application in this Court is as much a "matrimonial cause" as is the defendant's reciprocal application in the Family Court.
Thus, turning to s 5(1) of the Cross-vesting Act, the present case seems to me to fall within subpara (ii) of para (b). This Court would not have jurisdiction save because of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (the Commonwealth Cross-Vesting Act). Section 4(1) of that Act invests State courts with Federal jurisdiction, as Brereton J pointed out in Young v Lalic [2006] NSWSC 18 at [37]. However, leaving aside the Commonwealth Cross-vesting Act (as s 5(1)(b)(ii)(A) commands), the combined effect of ss 8(1) and 39 of the Family Law Act, coupled with the proclamation made in respect of this Court under s 40 of that Act, is that this Court would not have jurisdiction. Brereton J traced the history of those proclamations in his judgment in Young at [38]. There is no need to set out what his Honour there said.
It follows that the matter for determination would, on the hypothesis that the Commonwealth Cross-vesting Act does not apply, be one involving the application of a law of the Commonwealth not within the jurisdiction of this Court. Do the interests of justice require the matter to be transferred to the appropriate court, namely the Family Court?
The concept of the interests of justice really requires attention to be directed to the Court that is the more appropriate or natural forum for the resolution of the dispute. See BHP Billiton Ltd v Schultz (2004) 221 CLR 400. Of course, that decision speaks of s 5(2)(b)(iii) of the Cross-vesting Act, which has no counterpart under s 5(1). However, even as it stands, s 5(1) refers to "the interests of justice". It must be in the interests of justice for the specialist court set up to hear and decide such disputes to do so unless there is some very good reason to the contrary. In the present case, the only reason that this Court has jurisdiction is because of s 4(1) of the Commonwealth Cross-vesting Act. That does not seem to me to outweigh the considerations in favour of all disputes being dealt with by one court, the specialist court, in the one set of proceedings.
It is very difficult to see why it would create more expense, as Mr Stapleton suggested might be the case, or more delay, as both he and the plaintiff suggested might be the case. I say that simply because all the arguments that the plaintiff seeks to raise in this case are arguments that she could in any event raise in the Family Court, and that undoubtedly she will do, once, as I propose to do, these proceedings are cross-vested to that Court.
There were many other matters that were canvassed in the course of submissions. One of them related to an alternative source of jurisdiction in the Family Court based on the plaintiff's application for maintenance (s 74 of the Family Law Act), the matters to be taken into consideration in relation thereto, (s 75(2)) and, as I have indicated already, para (c) of the definition of matrimonial cause. Since those matters need not be decided for the purpose of making the order that I am about to make, and since (if decided) they would lead to no different outcome, I shall not spend time dealing with them.
I order that the proceedings in this Court be transferred to the Family Court of Australia.
[3]
[The parties addressed on costs.]
Although the defendant seeks his costs of the application, on the basis that he has vindicated his claim that the Family Court and not this Court is the proper court for the resolution of the dispute, the simple fact is that when I raised the question of cross-vesting, the defendant opposed it. In circumstances where neither party has obtained the relief that it seeks, I think that the appropriate costs order is that costs be costs in the Family Court proceedings, and I make that order.
[4]
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Decision last updated: 30 September 2016