ANZ v Ebsworth

Supreme Court of NSW|2015-08-14|Before: Hall J

Solicitors: Kemp Strang (Plaintiff/Respondent) Legal Minds (Defendants/Applicants) File Number(s): 2015/106627

Cross-Vesting Application

This is an application brought by way of Notice of Motion by the defendants, Marion Norma Ebsworth and Gaye Daphne Davies, to have proceedings transferred to the Family Court of Australia under s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). The Notice of Motion was supported by the affidavit of Christopher Kimberly Charles Serow, solicitor, sworn 13 July 2015.
The Australia and New Zealand Banking Group ("the ANZ"), as respondent to the application, relied upon the affidavit of Sarina Roppolo, solicitor, sworn 13 August 2015. Both parties filed written submissions which were supplemented by oral submissions at the hearing of the application on 14 August 2015. At the conclusion of the hearing, leave was granted to the applicants to provide supplementary submissions. This was done on 18 August 2015. Supplementary submissions for ANZ dated 19 August 2015 were also provided following the hearing.

The ANZ Proceedings

The principal proceedings in this court were commenced by the plaintiff, ANZ, by way of statement of claim filed 10 April 2015 in which the ANZ seeks an order for possession of a property the subject of two loan agreements, the details of which will be discussed below, as well as outstanding debts advanced by ANZ under those agreements.
The primary agreement relied upon by ANZ as pleaded in paragraph 2 of the Statement of Claim is a written agreement made on or about 22 December 2011 (and varied on or about 30 April 2012) between ANZ and Ms Davies (the second defendant), M&M Realty Pty Ltd trading as Ray White Engadine (M&M Realty) and SGM Realty Pty Ltd. Pursuant to the agreement, ANZ alleges that it agreed amongst other things: 1. To advance the sum of $750,000 to Ms Davies on a specified account (the Davies Business Loan). 2. To provide an Overdraft Facility to M&M Realty with a limit of $120,000 until 30 June 2013, and thereafter $80,000 on a specified account (the M&M Realty Overdraft); and 3. To advance the sum of $725,000 to M&M Realty on a specified account (M&M Realty Business Loan).
ANZ alleges in paragraph 2(d) and (e) of their Statement of Claim that: "(d) Ms Davies agreed to pay interest on the outstanding balance of the Davies Business Loan and, in all other respects, agreed to comply with the terms of the Agreement; and (e) M&M Realty agreed to pay interest on the outstanding balances of the M&M Realty overdraft and the M&M Realty Business Loan (the M&M Realty Facilities), and, in all other respects, agreed to comply with the terms of the Agreement."
ANZ further pleaded and rely upon two guarantees and indemnities dated 22 December 2011.
The first alleged guarantee is an Individual Guarantee and Indemnity agreement in writing dated 22 December 2011, entered into by Ms Ebsworth as guarantor of the performance of the obligations of M&M Realty to ANZ. This is referred to as the "Ebsworth Guarantee".
In accordance with paragraph 6(a) of the Statement of Claim it is alleged that Ms Ebsworth guaranteed that M&M Realty would pay to ANZ on time all money owing by M&M Realty to ANZ, up to the principal sum of $200,000 along with other amounts referred to in clause 2.2(a) of the Ebsworth Guarantee. This is referred to as the "Ebsworth Guaranteed Money".
The Statement of Claim also alleges that Ms Davies entered into an Individual Guarantee and Indemnity in writing dated 30 April 2012, whereby she guaranteed the performance of the obligations of M&M Realty to ANZ (paragraph 7). This is referred to as the "Davies Guarantee".
In paragraph 8 of the Statement of Claim it is pleaded that it was a term of the Davies Guarantee that Ms Davies provide a guarantee up to the principal sum of $1,360,000 along with other amounts referred to in clause 2.2(a) of the Guarantee, referred to as "the Davies Guaranteed Money".
ANZ further plead facts concerning a mortgage said to have been entered into between Ms Ebsworth and ANZ whereby Ms Ebsworth is alleged to have mortgaged her property in Narawallee to secure the amount of the balance which was owed or unpaid by Ms Ebsworth (the Secured Money) to ANZ: Statement of Claim at [9].
ANZ relies upon demands by it for payment of outstanding debts and pleads a number of defaults in payments due in respect of the subject loans.
In paragraph 11 of the Statement of Claim, ANZ pleads the alleged "events of default" which included: 1. Ms Davies' alleged failure to pay the Davies Business Loan Instalments as and when they became due and payable. As at 20 August 2013, the unpaid instalments allegedly totalled $4,253.66. 2. M&M Realty's alleged failure to pay the M&M Realty Business Loan instalments as and when they became due. The total amount of such instalments as at 20 August 2013 is alleged to have been $32,942.36.
ANZ also pleads that as at 8 April 2015 the M&M Realty Debt totalled $858,075.29 being the aggregate amounts of the outstanding balance on the overdraft account ($27,082.56) and the outstanding balance of the M&M Realty Business Loan ($830,992.73).
ANZ alleges that as at 8 April 2015 the Davies Debt totalled $188,993.66.
ANZ claims that in these circumstances Ms Davies is indebted to ANZ in the sum of $1,047,068.95 in respect of the M&M Realty Debt and the Davies Debt as at the time of the filing of the Statement of Claim.
ANZ further alleges that Ms Ebsworth is indebted to ANZ in the principal sum of $200,000 together with other amounts (unspecified) referred to in clause 2.2(a) of the Ebsworth Guarantee. ANZ claims that it is entitled to possession of the property offered as security by Ms Ebsworth.
Mr Serow, in his abovementioned affidavit, stated that the second defendant, Ms Davies, had executed an Initiating Application supported by a Financial Statement sworn 10 July 2015 which documents, according to Mr Serow, were at the time of his affidavit in the process of being filed in the Family Court of Australia.
As part of that application, an order is sought that a Binding Financial Agreement entered into between Ms Davies and her former de facto partner, Stephen Grahame Murphy, be set aside and declared void ab initio: Affidavit of Mr Serow at [4].
The application by Ms Davies in the Family Court of Australia seeks adjustment of property interests between her and her former de facto partner.
Annexed to Mr Serow's affidavit, and marked respectively "A" and "B", were unsealed copies of the application and financial statements sworn by Ms Davies that had been sent for filing in the Newcastle Registry of the Family Court of Australia.
In general terms, it was argued for Ms Davies that the proceedings in this Court, and those in the Family Court, are linked in such a way that it is in the interests of justice for the proceedings in this Court to be transferred to the Family Court and determined with the proceedings in that Court.
ANZ opposes the application for transfer.

Defences

In relation to the possession claim, Ms Ebsworth and Ms Davies have filed defences (dated 15 July 2015) as well as a Statement of Cross-Claim (dated 16 July 2015). The defendants have joined as parties to the cross-claim six cross-defendants including ANZ, the two companies involved in the loan agreements (both of which were in liquidation at the time of the cross-claim being filed), a further deregistered company, Daniel Quinn and Darren Vardy of SV Partners Insolvency (NSW) Pty Ltd and the Australian Securities and Investment Commission.
The fact of the loan agreements and the guarantee being entered into are not disputed by the defendants. The defences of Ms Davies and Ms Ebsworth are, broadly, that the loan and security agreements identified by the plaintiff were "unjust" in the circumstances relating to each at the time they were made, and that they are accordingly voidable and should be set aside pursuant to either s 7 Contracts Review Act 1980 (NSW) and/or s 12GM(7)(g)(ii) of the Australian Securities and Investment Commission Act 2011 (Cth). In their cross-claim, the defendants seek damages for both breach of contract and alleged unconscionable conduct.
More specifically, Ms Davies and Ms Ebsworth claim that they were misled by their accountant (Mr Lumtin) who they relied upon and trusted for advice. Mr Lumtin is alleged to have provided them with advice in relation to running and controlling the affairs of M&M Realty Pty Ltd. The defendants also allege that he represented to them that the real estate business was viable and capable of paying its debts. Ms Ebsworth pleads that she did not obtain independent financial advice. Ms Davies claims that she did not obtain independent financial or legal advice. The defendants allege that Mr Lumtin's knowledge of their position can be imputed to the ANZ by reason of communications between Mr Lumtin and an employee of the Wollongong branch of ANZ.
Ms Davies, importantly for the present application, submits in her defence (paragraph 21) that the debts owed to ANZ were incurred in respect of a Binding Financial Agreement entered into between Mr Murphy and herself. The case for Ms Davies is that the agreement, made under s 90UD of the Family Law Act 1975 (Cth), should be set aside by the Family Court of Australia. She claims that the agreements with the ANZ were entered into in order to give effect to the Binding Financial Agreement, which she asserts itself was entered into by her under pressure from Mr Murphy who wished to dispose of his interest in the real estate business previously operated by him and was unable to sell the same. The Binding Financial Agreement had the effect of transferring the real estate business to Ms Davies.

Family Court Proceedings

The Family Court proceedings concern an application to set aside the Binding Financial Agreement between Ms Davies and Mr Murphy, mentioned above. Binding Financial Agreements are a mechanism by which parties can consensually divide or alter their interests in property pursuant to the Family Law Act.
Section 90G of the Act sets out prerequisites which must be met for agreements to be binding on the parties. Section 90K of the Family Law Act identifies circumstances in which binding financial agreements can be set aside. Both of these sections are relied upon by Ms Davies as the bases for the order she seeks for the setting aside of the agreement. In particular, it is alleged that Mr Murphy, as a party to the agreement, failed to disclose material matters and engaged in unconscionable conduct. Moreover, reliance was also placed upon Ms Davies' assertion that she did not receive independent legal advice.

Cross-Vesting Legislation

The relevant section relied upon by the applicants/defendants in support of their application is s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987. Section 5 provides: 5 Transfer of proceedings (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. … (9) Nothing in this section confers on a court jurisdiction that the court would not otherwise have.
In determining whether to transfer proceedings, the three factors listed in subparagraph (ii) must be considered.
It was not disputed that the first two factors have little bearing on whether the transfer should be made in this case because the proceedings the subject of the application were (a) clearly capable of being instituted in this Court and (b) do not require the resolution of questions regarding the application of a law outside this Court's jurisdiction. In the ANZ's submission, however, the fact that s 5(1)(b)(ii)(A) and (B) have no application in this case are matters that operate against transfer of the proceedings.
The submissions of the parties then focused on whether, in accordance with s 5(1)(b)(ii)(C), it would be in the interests of justice to make an order for the transfer of these proceedings.

Applicant's Submissions

Ms B K Nolan of counsel, for the applicants/defendants relied upon an Outline of the Defendants'/Cross Claimaints' Submissions on the Application to Transfer the Proceedings dated 13 August 2015 and the Defendants'/Cross Claimants' Reply Submissions dated 18 August 2015.
The Outline of Submissions helpfully sets out the principles for determining the interests of justice for a transfer of proceedings under the Act, submissions in response to ANZ's reliance upon stated case law authorities, and the power of the Family Court to make orders in respect of third parties.
The applicants/defendants accepted that the applicable test requires a determination as to whether there are common transactions or facts, or a single justiciable controversy as discussed in Re Wakim; ex parte McNally (1999) 198 CLR 511. It was submitted that the claimed connection between the two proceedings, in essence, is that the entry by Ms Davies into the Binding Financial Agreement is pivotal to her arguments as to why the loan agreements the subject of the Supreme Court proceedings should be set aside. It was submitted that the fact of there being two separate transactions is not in itself conclusive. Rather, the Court should consider the connection between the transactions and the impact of the Binding Financial Agreement on the loan transactions between ANZ and the defendants: Applicants' Outline of Submissions at [39].
It was submitted by the applicants/defendants that the submission as to the requisite connection between the two sets of proceedings argued for by ANZ was too strict or limited. The submissions for the applicants relied upon the contention that it is sufficient that what is referred to as the 'federal claim' is material to the 'non-federal claim': Applicants' Outline of Submissions at [39]. The material connection was submitted to be the fact that if the Binding Financial Agreement is invalidated this would strengthen the applicants'/defendants' case to have the loan agreement set aside.
The applicants/defendants also submitted that ANZ's submission as to the Family Court's power to grant the relief sought by them is incorrect. It was submitted that if the proceedings were transferred to the Family Court, that Court would be exercising powers under State legislation operating as "surrogate" federal law under s 79 Judiciary Act 1903 (Cth).
In oral submissions at the hearing of the application on 14 August 2015, Ms Nolan contended: "All of the matters and facts that arise in the Family Court proceedings have the potential and more than likely will interweave with the issues here and the real questions that are certainly raised in the cross-claim and the defence. That is, the question of unfairness, the circumstances which existed at the time which the contract was formed for the purposes of s 7 of the Contracts Review Act touch and concern almost wholly the circumstances which gave rise to the Binding Financial Agreement being formed. They are almost incapable of separation, in my submission…" (T 19: 5-15).
In the Applicants' Reply Submissions, reference was made to the power of the Family Court to make orders in respect of third parties. It was argued that certain provisions of the Family Law Act, in particular s 90AE, would operate to enable the Family Court to make orders in respect of Ms Ebsworth's guarantee.
It was stated for the applicants that it was the intention to join Ms Ebsworth to the Family Court proceedings. It was contended that her joinder would enable the Family Court to make orders with respect to her property.

ANZ's Submissions

ANZ relied upon the fact that in the present case the proceedings do not concern property of the parties to the de facto relationship, but concern instead property owned by Ms Davies' sister, Ms Ebsworth. The decision in Valceski v Valceski [2007] NSWSC 440; 70 NSWLR 36 was accordingly said to be distinguishable on that basis.
It was submitted for ANZ that it is clear that the Family Court does not have ordinary jurisdiction either in relation to the claim against Ms Davies, or the claim against Ms Ebsworth: Plaintiff's Written Submissions at [27].
ANZ also submitted that the Family Court lacks accrued jurisdiction, on the basis that despite the fact that the loan agreements were entered into immediately following the Binding Financial Agreement, they are in fact separate transactions. The issue of jurisdiction, it was observed, was intrinsically linked to the question of whether a transfer was in the interests of justice. If jurisdiction of the proposed Court was in doubt it would not be in the interests of justice to make the transfer.
It was also submitted on behalf of ANZ that its claims against the two defendants are not dependent in any way on the Binding Financial Agreement being set aside in the Family Court. The facts concerning that Agreement were, it was submitted, quite irrelevant. Additionally, it was submitted by ANZ that in this case there is no "single justiciable controversy" in the sense discussed in Re Wakim; ex parte McNally, supra. In that respect it was submitted that in the present case there are two different sets of proceedings with different parties. This in itself, it was submitted, established more than one matter or controversy. It was observed that although there was a possibility that the two sets of proceedings may traverse some of the same subject matter, it was a relevant factor that the various claims could not have been joined in one proceeding in either court. It was further noted for ANZ that the point of most significance in Re Wakim was whether the claims pursued in different proceedings were the same. In this case, in ANZ's submission, the claims advanced by Ms Davies against the bank are different from those advanced by her against Mr Murphy in the Family Court.
ANZ noted that the validity or otherwise of the Binding Financial Agreement was only one aspect of the first defendant's defence to the claim for possession. The fact that at least part of the claim made against ANZ by the defendants was independent from the Binding Financial Agreement the subject of the Family Court proceedings was said to be a further reason for the two matters being characterised as separate matters.
ANZ further submitted that even if the Court was satisfied that the Family Court had accrued jurisdiction to deal with the whole of the dispute, it was doubtful whether that Court has power to grant the relief sought in the possession claim, the property the subject of its claim belonging to Ms Ebsworth who is not a party to a de facto relationship within the meaning of the Family Law Act. Additionally, Ms Ebsworth, it was noted, would not be bound by any declaration made by the Family Court with respect to the rights of the parties to those proceedings in that court.
ANZ also submitted that it was not required to persuade this Court that the Family Court lacks jurisdiction in respect of the present proceedings in order for it to successfully oppose the application for a transfer. The transfer, it was submitted, should be refused if it is seriously arguable that the Family Court lacks jurisdiction in respect of the whole of the dispute (reliance was placed on Benlair Pty Ltd v Terrigal Grosvenor Lodge Pty Ltd [2006] NSWSC 339 at [56]-[58]; Valceski v Valceski at [21]; Rayhill v Lewis (Family Court of Australia, unreported, 8 March 2005).
ANZ submitted that the accrued jurisdiction does not extend to this case where it is said that the claims are entirely severable: Plaintiff's Written Submissions at [18]. The submission in that respect for ANZ was: "… the accrued jurisdiction extend[s] to claims based on facts that are either 'identical' or 'almost wholly' identical: Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 480 per Barwick CJ; 499 per Gibbs J, 516 per Mason J …"
ANZ acknowledged that the determination of the scope of the accrued jurisdiction is ultimately "a matter of impression and practical judgment": Fencott v Muller (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ.
The submissions for ANZ observed that in Fencott it was held (at 607) that, although no precise formula could be derived as to whether accrued jurisdiction exists, a sound test for accrued jurisdiction was whether the non-federal claims arise out of "common transactions or facts". Further, in that case (at 607), it was stated that this test was similar to the alternative formula that the non-federal claims "must derive from a common nucleus of fact" such that the plaintiff "could ordinarily be expected to try them all in one judicial proceeding": Plaintiff's Written Submissions at [20].
ANZ in its submissions noted that the Family Court has an "associated jurisdiction" under s 33 of the Family Court Act in respect of matters not otherwise within that Court's jurisdiction but which are "associated" with matters that are within its jurisdiction: Plaintiff's Written Submissions at [22]. That said, it was noted that the associated jurisdiction is significantly limited because it extends only to associated matters arising under some federal law: Plaintiff's Written Submissions at [23].
Other factors, aside from jurisdictional matters, identified by ANZ as being relevant to whether a transfer was in the interests of justice include: 1. That there may exist other related disputes which will have to be determined separately to the Family Court proceedings, for example, in the event a claim is made by Ms Davies against the solicitor who advised her prior to entry into the Binding Financial Agreement (referred to in the Affidavit of Christopher Serow at [43]), or a claim against her accountant; 2. The fact that ANZ's possession proceedings were instituted before the Family Court proceedings were commenced; 3. That aspects of the claim advanced by the defendants against ANZ in their cross claim are misconceived. This includes, it was argued, the imputation of the defendants' accountant's knowledge to ANZ; and 4. The contention that it is not appropriate for ANZ to become involved in a matrimonial dispute (Commonwealth Bank of Australia v Newhook (2015) 52 Fam LR 100 at [42]).

Consideration

By s 31(1)(aa) of the Family Law Act 1975 (Cth), the Family Court has jurisdiction with respect to "matters arising under the [the Family Law Act] in respect of which a de facto financial causes are instituted".
The expression "de facto financial cause" is defined in s 4 of the Family Law Act to include: "(c) proceedings between the parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them; or … (e) without limiting any of the preceding paragraphs, proceedings with respect to a Part VIIIAB financial agreement that are between any combination of: (i) the parties to that agreement; and (ii) the legal personal representatives of any of those parties who have died; (including a combination consisting solely of parties or consisting solely of representatives); or …"
In addition to the jurisdiction conferred by the Family Law Act, the Family Court has an "accrued jurisdiction" to deal with non-federal claims. This would include a claim for relief pursuant to the Contracts Review Act 1980 (NSW) where they form part of the same matter or justiciable controversy.
The parties referred to a number of authorities on the application of the cross-vesting legislation. These include the judgment of Brereton J in Valceski v Valceski, supra. In that case, his Honour considered the provisions of s 5(1). In identifying the matters requiring consideration, his Honour observed: 1. That it is necessary that the transferee court has jurisdiction to hear the matter proposed to be transferred. Without jurisdiction, the transferee court will not be more appropriate than the court in which the proceedings have been commenced: Valceski at [20]. 2. That if it is seriously arguable that the transferee court does not have the requisite jurisdiction, it is unlikely that the court will be more appropriate than a transferor court which undoubtedly has jurisdiction: Valceski at [21].
ANZ's submissions on this application in effect were that the Family Court has no accrued jurisdiction to hear the matter because there is not one single justiciable controversy. Even if the Family Court had jurisdiction, it was submitted, it would not be in the interests of justice within s 5(1)(b)(ii)(C).
In Valceski, Brereton J in relation to when the accrued jurisdiction of a Federal court arises, including the Family Court, observed: "…when a federal court is invested with federal jurisdiction, it is also invested with the power to determine non-federal aspects of a justiciable controversy which involves the exercise of its federal jurisdiction, provided that the non-federal aspects of the controversy form an integral part of the same controversy: Stack v Coast Securities (No 9). The scope of the "matter" in respect of which a federal court has jurisdiction is described by the ambit of the justiciable controversy. There is but a single matter, and the non-federal claims are within the accrued jurisdiction, where the different claims arise out of "common transactions and facts" or "a common substratum of facts" (Philip Morris Inc (at 512 per Mason J)), notwithstanding that the facts upon which the claims depend "do not wholly coincide" (Fencott v Muller (at 607 per Mason J, Murphy J, Brennan J and Deane J); Re Wakim (at 586 [141])); or where different claims are so related that the determination of one is essential to the determination of the other (Philip Morris Inc (at 512 per Mason J)); or where, if the proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings (Re Wakim (at 586 [141])). However, it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy. In Stack v Coast Securities (No 9) (at 294), it was put in the following terms: "In this, as in other cases, the recurrent problem is to identify what it is that falls within the Federal Court's accrued jurisdiction. The majority judgment in Fencott v Muller ((1983) 152 CLR, at p 608) provides assistance in reaching an answer: 'What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationship. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter." (emphasis added)
I have had regard to Ms Davies' application to the Family Court, to the pleadings in the present proceedings, and the evidence adduced in the present application, in particular the extent to which it reveals the likely substratum of facts in both cases. Whilst both sets of proceedings raise issues concerned with unconscionability principles and related conduct, they arise in the context of separate "matters" in particular involving the making of different agreements, which involved different parties, made at different times. In my opinion, this is not a case where there is an overlap between the issues which should be determined in proceedings. There is not, in my assessment, one justiciable controversy, but two separate controversies. A determination in the Family Court proceedings of issues concerning the Binding Financial Agreement, and the making of any orders by the Family Court, cannot determine or resolve any issue between ANZ and Ms Davies, or between ANZ and Ms Ebsworth. The proceedings in this Court concern later agreements made between ANZ and the defendants for the loan facilities and security which did not involve Ms Davies's former de facto partner. There was no property jointly owned by Ms Davies and Mr Murphy provided as security to the ANZ loans.
As is plain from the passage quoted above, the question of whether there exists single or multiple controversies in relation to both proceedings, depends on an examination of the pleadings in both proceedings and the relevant factual substratum of each case. In summary, there are individual factors to be considered in this case which point strongly against there being one controversy. In that respect I note the following: 1. The two sets of proceedings concern two different transactions, entered into by the second defendant, Ms Davies, in close proximity to one another but not at the same time or in the same context. 2. The two sets of proceedings concern different parties and relationships: 1. The Family Court proceedings arise between Ms Davies and her former de facto partner, Mr Murphy, who is not a party to the Supreme Court proceedings. 2. ANZ has been joined to the Family Court proceedings as second respondent but the issues in those proceedings are of no relevance to the ANZ loan transaction 3. The proceedings in this Court are between ANZ, Ms Davies and Ms Ebsworth. Ms Ebsworth is not a party to the Family Court proceedings. 4. The legal interests of Ms Ebsworth and the ANZ, as two key parties in the Supreme Court proceedings, are unrelated to the Family Court proceedings as discussed above. 1. The two sets of proceedings are concerned with different property. The property at Narrawallee the subject of the mortgage and possession claim in this Court is not the subject of the Family Court proceedings. As Ms Ebsworth is not a party to the Family Court proceedings, her property has no connection to the Family Court proceedings.
If there had been proceedings in possession between ANZ and Ms Davies concerning property of the de facto relationship, it could be more readily concluded that a single controversy existed: see, for example, Valceski, supra. The fact that the possession dispute involves a third party would not be an obstacle. In Valceski Brereton J discussed the facts in In the Marriage of Warby (2001) 166 FLR 319 and observed at [50] that the Full Court in that case had held that: "…The Family Court's jurisdiction is not restricted to the determination of the family law claim but (by way of accrued jurisdiction) extends beyond to the whole litigious and justiciable controversy of which the family law claim forms part - including those parts of it that arise under or are governed by State law, common law or equity, and whether between the parties to a marriage or between a spouse (or spouses) and a third party" (Emphasis added).
That proposition, however, does not extend the accrued jurisdiction to a case like the present where one set of proceedings concerns a dispute, inter alia, between two parties (ANZ and Ms Ebsworth), affecting property in which the parties to the de facto relationship have no interest.
In Commonwealth Bank v Newhook [2015] NSWSC 41, this Court (Button J) made orders transferring possession proceedings brought by the Commonwealth Bank in this Court to the Family Court. The property the subject of the possession claim was owned by the defendants, who were also both parties to the Family Court proceedings. Importantly, the property itself was the subject of the Family Court proceedings. In that case, there was no dispute as to the accrued jurisdiction of the Family Court as exists in this case.
I additionally note that in Newhook, Button J accepted a submission for the bank that banks should not, generally, become involved in matrimonial disputes (at [42]) but determined that the Commonwealth Bank in the circumstances of that case was "already caught up in the dispute" because Mrs Newhook was alleging against her husband that he had forged her signature on agreements giving rise to loans from the bank. A circumstance of that kind does not exist in the present case.

Conclusion

It is a pre-requisite to a transfer order that the transferee court have jurisdiction in respect of the relevant matter. It will not be appropriate that the relevant proceedings be determined by the proposed transferee court if it does not have jurisdiction to do so: Valceski, supra, at [20]. In the present case, the Family Court does not have jurisdiction to hear and determine the rights, inter se, between ANZ and Ms Ebsworth. In particular, the Family Court does not have power to make an order in respect of her Narrawallee property.
Even if it were not possible for a conclusive determination to be made as to the jurisdiction of the Family Court in respect of the proceedings in this Court, the principle to be applied is that it will not be more appropriate that the proceedings in this Court be determined by the Family Court given that it is seriously arguable that that Court does not have jurisdiction to do so.
Where it is seriously arguable that the Family Court does not have jurisdiction in respect of the proceedings in this Court, then, in my opinion, it would not be in the interests of justice to transfer the proceedings from this Court, which does have undoubted jurisdiction, to a court whose jurisdiction is arguable and uncertain: Valceski, supra, at [22].
The agreements entered into between ANZ and Ms Davies for the provision of the loan facilities, as well as the indemnity and guarantees by Ms Davies and Ms Ebsworth, do not, in my opinion, fall within the scope of the "matter" in respect of which the Family Court has jurisdiction. That is to say such agreements and the issues arising in respect of the same in the present proceedings do not fall within the ambit or scope of the justiciable controversy in the Family Court.
The proceedings in the Family Court, and the proceedings in this Court, involve claims that do not arise out of common transactions and facts. They do not arise from a common substratum of facts.
The proceedings in this Court do not concern property of a de facto relationship. The property involved does not form part of the subject matter of the proceedings in the Family Court.
The issues as between Ms Davies and Mr Murphy in the Family Court do not involve or require the resolution of any issue concerning Ms Ebsworth's property, it not forming part of the "property pool" available for distribution or resolution of the Family Court proceedings.
The loan/security transactions between ANZ and Ms Davies did not involve property interests of Ms Davies' former de facto partner and, further, he was not a recipient of any of the loan funds or facilities provided by ANZ to Ms Davies under the agreements referred to above.
The identification of the relevant justiciable controversy is not, I note, to be determined only by consideration of there being separate proceedings and different parties in the one court. The central issue in the present case has required attention to the pleadings and the factual basis of each claim.
The consideration of the interests of justice in this case, in my opinion, preclude a finding that it is more appropriate that the proceedings be determined by the Family Court.
The status of the Binding Financial Agreement, the subject of the proceedings in the Family Court, and the rights or interests concerning the same, do not intersect or affect contractual rights and interests in related transactions between ANZ and the applicants, Ms Davies and Ms Ebsworth.
I have, for the above reasons, concluded that, having regard to the interests of justice within s 5(1)(b)(ii)(C) of the Jurisdiction of Courts (Cross-Vesting) Act 1987, it is not appropriate that the present proceedings in this Court be determined by the Family Court.

Orders

Accordingly I make the following orders: 1. The first and second defendants' Notice of Motion dated and filed 18 June 2015 is dismissed.
I will hear the parties in relation to any consequential orders, including orders as to costs. I will also hear the parties in relation to case management of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2015

Australian Securities and Investment Commission Act 2011(Cth)

(2015) 52 Fam LR 100

At a glance

Court

Decision date

Before

Catchwords

Source

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Judgment (12 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (8)

Cited By (2)