On 30 September 2022 the defendant/applicant filed a motion to transfer these proceedings to the Federal Circuit and Family Court of Australia (FCFCOA) pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (JCVA), or alternatively permanently stay them until final determination of the Federal Circuit and Family Court of Australia (FCFCOA) proceedings. The transfer was opposed by the plaintiffs/respondents.
The background to the proceedings is as follows.
The applicant and the second respondent were a de facto couple, who had three children during their relationship. They permanently separated in late 2020.
The first respondent is the second respondent's mother.
In the statement of claim in these proceedings the respondents seek declarations as to the beneficial ownership of a property at Castle Hill (the Property). The respondents' primary position is that the Property is held by the second respondent on trust for the first respondent and the Property therefore is not part of the assets of the de facto relationship. While that relief does not require any positive action by the applicant, the declarations would bind her.
It is not in dispute that the Property was originally owned by the first respondent's former husband (the second respondent's father), Wahid. The Property was transferred to the second respondent in June 2014 and a Deed of Transfer between the respondents and Wahid provided in recitals:
A: [The first respondent] and Wahid are married but their relationship has broken down irretrievably. They are currently separated and intend to divorce as soon as practicable.
B: [The second respondent] is the son of [the first respondent] and Wahid.
C: At the request of [the first respondent] Wahid has agreed that he will transfer the Property to [the second respondent] in consideration of a $100,000 deposit from [the second respondent] and [the second respondent]'s agreement to obtain finance to discharge Wahid's mortgage on the Property and service any further loan on the Property and as part of a proposed matrimonial property settlement between Wahid and [the first respondent].
D: If required, Wahid has irrevocably appointed [the second respondent] as his agent … to sign the Transfer on his behalf and to do all other things on his behalf as is reasonably required to bring about the Transfer of the Property from Wahid to [the first respondent].
An earlier version of the Deed contemplated that the Property would be transferred to the respondents as tenants in common. The second respondent's evidence was that the earlier version of Deed was abandoned because the lender would not lend money to the first respondent because of her financial position and poor credit rating.
After the Property was transferred to the second respondent, the first respondent continued to live in part of the Property.
On 11 November 2020, after the second respondent and applicant had separated, the respondents entered into a "Deed of Agreement", in which there are 16 recitals setting out the relationship and separation of the first respondent and Wahid and the position adopted by the respondents to the effect, inter alia that:
1. Wahid "would relinquish and transfer his share right, title, interest of the Property to [the first respondent]".
2. The first respondent was unable to satisfy the lending criteria to obtain a loan for the Property and the second respondent assisted her by becoming registered proprietor.
3. The parties agreed that the first respondent is the equitable owner of the Property and the second respondent "has no interest or title in the Property whatsoever".
On 15 June 2021 the second respondent commenced proceedings in Division 2 of the FCFCOA for parenting orders, seeking access to the children, but no property orders.
On 10 November 2021 the FCFCOA made orders that the three children of the relationship live with the applicant and spend no time with the second respondent until further order.
On 16 June 2022 the respondents filed the statement of claim.
On 17 June 2022 the applicant filed a further amended response to the second respondent's initiating application in the FCFCOA raising property orders for the first time:
16. The Court declares that the Applicant is the sole legal and beneficial owner of the [Property] at law and in equity.
17. That consequential upon the making of Order 16 above, it be declared that the purported Deed of Agreement between the Applicant and Second Respondent dated 11 November 2020 be declared invalid or in the alternative set aside.
[2]
Jurisdiction
The applicant's claim for property orders invoked the jurisdiction exercised by FCFCOA (Div 2) in respect of persons in a de facto relationship conferred by Pt VIIAB of the Family Law Act 1975 (Cth). Within that part, s 90ST specifies that it is the duty of the particular FCFCOA court hearing the proceedings to "as far as practical make such orders as will finally determine the final relationships between the parties to the de facto relationships and avoid further proceedings between them".
The applicant's written submissions were primarily directed to the alternative relief of a stay, while not expressly abandoning the relief by way of transfer. There might have been some doubt as to the applicant's position because of the use of "if" in her submissions:
The alternative formulations of relief reflect the fact that the powers of this Court depend on whether the proceedings in the FCFCOA reside in division 1 thereof... or division 2. … If it is the former, a transfer of these proceedings to the FCFCOA is not available.
However, there was never a dispute that the second respondent had commenced proceedings in FCFCOA (Div 2).
Counsel for the applicant confirmed at the hearing of the motion on 21 October 2022 that the application for a transfer was no longer being pressed because this Court could at most by reason of s 6 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) transfer the proceedings to the FCFCOA (Division 1) (see Federal Circuit and Family Court of Australia Act 2021, s 52). As Beech-Jones CJ at CL has noted in Yu v Wang [2021] NSWSC 1280 at [18] this appears to be an "unfortunate omission" in the legislation. It was therefore said that if this Court transferred the proceedings, when the second respondent and applicant are currently involved in Division 2 proceedings, a further transfer or consolidation would be necessary within the FCFCOA.
The consequence is that it is unnecessary to engage with a number of jurisdictional questions which were the subject of some argument between counsel. For instance, there was a question of whether the applicant can rely on s 5(1)(b) of the JCVA (Cth) rather than the JCVA (NSW) and whether any transfer of the proceedings under s 5(1)(b) would only result in the proceedings being transferred to Division 1 of the FCFCOA while the current FCFCOA proceedings remained in Division 2.
[3]
Stay Application
The basis for the applicant's application for a stay is that the FCFCOA (Div 2) is able to deal with all aspects of the dispute between the parties, including the matters raised in these proceedings, and that the interests of justice warrant the one court dealing with all those matters and, in particular, matters of credit.
There was no dispute that both the FCFCOA and this Court have jurisdiction to hear the issue of ownership of the Property.
The respondents resisted the permanent stay, based on the following submissions.
First, these proceedings concerning the respondents' ownership of the Property are a discrete matter that need not be heard by the FCFCOA, and concern matters that are most commonly determined by the Equity Division of the Supreme Court. While that might be so, it does not mean this Court must refuse the stay.
Secondly, it was said that it is likely that there will be longer delays, particularly for the first respondent, if all issues are determined by the FCFCOA. There was competing solicitors' evidence about the likely timeframe for the listing of the parties' matter in the FCFCOA. However, I do not consider it is possible to conclude that the litigation of the issue concerning the Property will determined more slowly in the FCFCOA, particularly in circumstances where the respondents submitted they will be seeking to have that matter agitated as a separate matter as soon as possible, should the stay be granted. I do not consider there are obvious time savings for this Court to determine these proceedings, rather than allowing the FCFCOA to determine the Property issue, particularly where a determination in this Court could be the subject of an appeal, and the FCFCOA would need to delay considering the property distribution until any appeal was finalised: Vaughan v Frost [2010] NSWSC 492 at [16] (White J).
Thirdly, while it is possible that credit findings of the parties may be inconsistent if this Court and FCFCOA hear different aspects of the issues between the second respondent and applicant, such a situation is not unheard of. However, the applicant submitted, and I accept, that credit in this case will be important in light of the pleaded oral agreements between the respondents and alleged inconsistencies in the documentary evidence. Credit may also be important in relation to parenting matters. Therefore, it appears that if the FCFCOA hears all matters there will be more consistency and less duplication.
In considering whether or not to grant a stay, the starting point is that the interests of justice warrant a single court dealing with the entirety of the dispute between the parties. As has been concluded by other judges of this Court in other proceedings, that factor strongly supports the granting of a stay on the understanding that the Division 2 Court will resolve all matters between the parties: see eg Yu v Wang [2021] NSWSC 1148; Valceski v Valceski (2007) 70 NSWLR 36; Burman v Zillman [2017] NSWSC 229.
In this regard, it appears that the sole purpose of these proceedings was to obtain a declaration of the ownership of the Property to bind the applicant; the respondents are ad idem as to their position. The FCFCOA can also determine the same matter for the parties and simultaneously consider the applicant's claim for an order under s 106B Family Law Act 1975 (Cth) to set aside the Deed of Agreement between the respondents, a matter which would otherwise need to be agitated by the applicant in another way in these proceedings, which would result in the incurring of further costs.
[4]
Conclusion and orders
It follows from the above, that I am satisfied that the proceedings should be stayed, on the basis that one court, namely the FCFCOA, should determine all the property issues in dispute between the second respondent and the applicant, including the matters the subject of these proceedings.
The respondents indicated that the applicant ought to pay their costs for dealing with the abandoned issue of transfer. The applicant sought to be heard on costs after judgment.
For those reasons I order:
1. These proceedings are stayed until further order of the Court.
2. Unless either party makes an application for a different costs order to the Associate to Peden J by 4pm 26 October 2022, the respondents are to pay the applicant's costs of the motion as agreed or assessed.
3. Should an application for a different costs order be made pursuant to Order 2:
1. That application should include submissions of not more than 2 pages and any necessary evidence;
2. The other party may serve and provide to the Associate to Peden J responsive submissions of not more than 2 pages and any necessary evidence by 4pm 28 October 2022.
[5]
Amendments
24 October 2022 - Spelling of plaintiff's name corrected.
24 October 2022 - Solicitors' details corrected on coversheet
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Decision last updated: 24 October 2022